Customer Relationship Management at Tesco Submitted By

IHTISHAM AKHTAR
Dissertaion MBA in Marketing London of business

University of wales
September 2011

Chapter1Table of Contents
1. Introduction....................................................................................................... 1.1. Scope of Research....................................................................................... 1.2. Aims and Objectives....................................................................................

2.

Background and Literature Review.................................................................... 2.1. Introduction.................................................................................................. 2.2. Tesco an Overview....................................................................................... 2.2.1. Competition at Tesco............................................................................. 2.2.2. Pricing strategies................................................................................... 2.2.3. Tescos Brand Position........................................................................... 2.2.4. Customer Retention............................................................................... 2.2.5. Customer Loyalty................................................................................... 2.3. Overview Definitions of Customer Relationship Management...................... 2.3.1. An Overview of the Conceptual Development of Customer Relationship Management................................................................................. 2.3.2. Customer Relationship Management in Business.................................. 2.3.3. Relationship Marketing and CRM........................................................... 2.3.4. Customer Relationship Management at Tesco....................................... 2.3.5. Reasons for Implementing CRM............................................................. 2.4. Managing Customer Relationships in the financial services......................... 2.4.1. Types of Customer Relationship Management....................................... 2.4.2. Benefits (Rewards) of Customer Relationship Management.................. 2.4.3. Problems/challenges of Customer Relationship Management............... 2.4.4. The future of Customer Relationship Management................................ 2.4.5. Conclusions............................................................................................ 3. Methodology...................................................................................................... 3.1. Overview...................................................................................................... 3.2. Research Design.......................................................................................... 3.3. Data Collection............................................................................................. 3.3.1. Primary data.......................................................................................... 3.3.2. Secondary data...................................................................................... 3.4. Data Sampling............................................................................................. 3.5. Data Analysis............................................................................................... 3.6. Validity and Reliability................................................................................. 3.7. Limitations................................................................................................... 3.8. Ethical and Legal Considerations................................................................. 3.9. Outcome...................................................................................................... 4. Results: Analysis of Findings.............................................................................. 4.1. Summary..................................................................................................... 4.2. Tesco.com and Tesco Direct........................................................................ 4.3. Customer Relationship Management and Tesco Clubcard........................... 4.4. Innovative and mobile marketing schemes.................................................

1.3. Research Questions............................................................................. 1.4. Significance..........................................................................................

4.5. Embracing Technology................................................................................. 4.6. Conclusions of Findings................................................................................ 5. Recommendations and Conclusions.................................................................. 5.1. Recommendations....................................................................................... 5.2. Conclusions.................................................................................................. 6. REFERENCES......................................................................................................

Appendix A: Letter of Introduction............................................................... Appendix B: Interview Questions................................................................................................. Appendix C: Questionnaire...........................................................................................................

List of Figures
3

Figure 1: Customer Retention: Building Long-term Relationships 15 Figure 2: Conceptual of Customer Loyalty 17 Figure 3: The Four Dimensions of Customer Relationship Management 21 Figure 4: Classifications and Composition of Customer Relationship Management 25 Figure 6: Customer perceptions on Tesco CRM success 50 Figure 7: Customer Services Ranking for CRM 50 21 Figure 5: Customer Relationships Management Conceptual Model

Abstract
Customer relationship management (CRM) has been widely regarded as a company activity related to developing and retaining customers through increased satisfaction and loyalty. However, there is still much debate over exactly what constitutes CRM. In fact, many scholars have claimed that the precise meaning of CRM is not always clear in the literature and it is perceived too young to be fully formed yet. This dissertation discusses the relationships that keep international student customers loyal to Tesco even after graduation and how CRM can continue to contribute and assist the bank to retain its customer base for the long-term benefits of both parties. The theoretical framework was positioned to investigate into Customer Relationship Management (CRM) at Tesco. The main purpose of this research is the study and analysis of Tescos customer relationship management, which is an activity that has been supporting the growth of Tesco assist the giant supermarket to retain and improve on its market leadership. Customer relationship at Tesco has helped the company to retain its customer base over the years and has effectively enhanced the international increase as they take their experience with them wherever they went.

The scope of this project was the identification of the potential growth areas of the Tesco customer management, and to learn lessons from of how Tesco was able to make customer relationship management at Tesco success, thereby positioning itself as global leader

The outcomes of this study are relevant and enable the derivation of 5

recommendations that when followed can enable the replicate of this success. Customer positioning is very important and it will extensively be discussed. This study will also study and discuss the positioning of luxury brands at the same shelves as those of competitors products that has the advantage of consumer memory due to years of awareness and advertising that has contributed the customers continuously loyalty all over the years to date.

ACKNOWLEDGEMENTS I write to sincerely acknowledge the guidance of my Supervisor without whom this work would not have been possible. I would also like to acknowledge the support of my friends, work colleagues and classmates who were a great source of support during some difficult times in my educational pursuits. I will also like to acknowledge the help of those that helped with discussions on Customer Relationship Management issues that have contributed in widening my understanding and have helped me in formulating the answers to the research questions which was very useful. I would also like to acknowledge the support of my family especially my parents.

1. Introduction
Tesco was originated in the markets of Londons East End, where in 1914, war veteran Jack Cohen began to sell groceries. The brand name of Tesco first appeared on packets of tea in the 1920s. Tesco has seen a rapid growth and transformation over the years to become the UK most profitable and giant supermarket and overtook Sainsbury in 1995. In 200, Tesco has captured 15.6% of the grocery market in the UK, which increased to 28% in2004 and it currently controls over 34% of the UK grocery market (UK, 2004). Tesco now operates 2318 stores in twelve countries and has over 328, 000 employees and is now the principal private employer in the UK. In recent years Tescos business growth was based on abroad expansion and on trading in merchandise other than foods. Tescos success in UK has been mainly been built on low prices, customer loyalty and expansion into other markets such as banking, insurance and telecommunication. This diversification has been a great success that 20% of giant market leader sales in 2004 were from non food. Tesco is the largest petrol retailer and it operates Tesco Finance in association with Royal bank of Scotland, and Tesco.com services (Tesco.com, 2010). Tesco is the number one food retailer in the UK with stores in UK, Europe and Asia. Tesco also offers financial services and products, insurance and banking services and many varied services. In 2004, the company announced that it was purchasing the family-run chain Adminstore, which operates the Europa, Harts and Cullens grocery 7

outlets in the London area, for 53.7 million. By April 2004, Tesco faced a hurdle in its acquisition of Adminstore, even though the Office of Fair Trading (OFT) cleared its bid, as the federation of Wholesale Distributions (FWD) attempted to block the deal. The FWD argue that the OFTs decision was flawed since the acquisition would make it virtually impossible for independent retailers to open new stores in central London (http://web.ebscohost.com/ehost/detail?vid=5&hid=112&sid=04bfca2632d1-4eb2-b343- c1fe7c1f3b6e %40sessionmgr103&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d %3d#db=bth&AN=36585680) On the other hand, notwithstanding Tescos position as the giant retailer in the United Kingdom (UK), its performance in terms of sales was worst in 16 years in 2008 which raised fears over its growth and domination of the UK market was seriously threatened (Thompson, 2008). Although this slowing down of Tescos growth was due to stiff competition from its main competitors such as Asda, Morrisons (Morrisons, 2010) and Aldi (Aldi, 2010), much of the cause of the slowdown was due to Tescos vulnerability to the recession and its consequent impact on consumer spending habits which has been completely transformed. Although the overall performance of Tesco is not all gloomy as witnessed by overall global boost of sales of 11.7% in 2008 and a forecast (in 2008) of profits of 2.9 billion in 2008, its ;local UK forecast was not that rosy with only a 2% growth which was its worst for 16 years. In fact in 2008, the 2% sales enlargement of Tesco was below that of Asdas 6.9% and Sainsburys 3.9% (Thompson, 2008). Unpromisingly, apart from a changing customer spending and shopping patterns due to the economic downturn, the slowing down of Tescos sales was partly due to them losing their customers to their competitors. This trouncing of sales and customers to their main competitors in the UK was a consequence of falling food prices, the economic slump and Tescos response to the competition by way of discounts on many of its brands. This slump in Tescos sales of 2008 was 8

just a blip which spurred the retail giant to fight back. The main purpose of this research is the study and analysis of Tescos customer relationship management, which is an activity that has been supporting the growth of Tesco assist the giant supermarket to retain and improve on its market leadership. Customer relationship at Tesco has helped the company to retain its customer base over the years and has effectively enhanced the international increase as they take their experience with them wherever they went. This relationship with customers saw the development of Tesco products and services brands, which is one of Tescos premium labels which overtook Kellogg as UKs biggest grocery brand and posted of 1.2 billion Tesco in 2007. One of the key objectives of this research is the study of the customer relationship management attached to its success over the years amidst the fierce competition facing the giant store, and it will study how Tesco was successful despite all odds in the market. This research will investigate why customer relationship has helped the giant store from being nowhere to become the market leader in 1995, a position it maintains today. For example, a decade ago, businesses including supermarkets have being mindful of the importance of customer management and most businesses thought customer relationship was not the reason for driving sales, notwithstanding the kingship of the customer. The outcomes of this study are relevant and enable the derivation of recommendations that when followed can enable the replicate of this success. Customer positioning is very important and it will extensively be discussed. This study will also study and discuss the positioning of luxury brands at the same shelves as those of competitors products that has the advantage of consumer memory due to years of awareness and advertising that has contributed the customers continuously loyalty all over the years to date.

1.1.Scope of Research
Customer relationship management (CRM) is getting increasingly more paramount and powerful as evidenced by the move to creating CRM 9

departments across most businesses with supermarkets inclusive.

This

has and is continuously driving the sales force of business, for example, Tesco was not the leader the industry but due to organized and planned marketing relationship management in dealing with customers across the entire store, their history changed from being a follower to a market leader by overtaking its main competitor, Sainsburys in 1995. Due to this, Tesco customer relationship has continued to attract strong market penetration and in roads, and they are establishing themselves as big money makers for their companies. Tesco continue to increase market share through offering better value and providing more choice and convenience to customers. The scope of this project was the identification of the potential growth areas of the Tesco customer management, and to learn lessons from of how Tesco was able to make customer relationship management at Tesco success, thereby positioning itself as global leader. The study was not limited to the critical analysis and observations but an overall study of the Tesco Customer relationship management, from conception to market domination. This study will enable the drawing up of recommendations of value to be made.

1.2.Aims and Objectives

The key aims of this study are the establishment of the current strength of the customer relationship management at Tesco and to analyse the key factors behind its success. Another objective of this research is to gain an in-depth knowledge of the workings of Tesco customer relationship management. The objective also is what future also holds for relationship marketing that saw the development of Tesco Direct (Tescos online arm) as a result of the feedback the company continued to receive from loyal customers, which has the aim of customer satisfaction for future expansion and driving sales, thereby ultimately outstripping traditional store sales in future.

1.3. Research Questions

In order to achieve the research objective, it is necessary to formulate appropriate research questions that need answers. Consequently, this 10

research aims to provide answers to the following research questions.

1) Why customers continue to be loyal to Tesco and not changing to their competitor? 2) What is it that Tesco does to keep and retain customers and what add-ons services do the market leader offer to earn their customer loyalty? 3) What are customers attitudes towards the supermarket and how does the market leader relates and manages such attitudinal behaviours?

4) What is the role of customer relationship management in the retention Tescos customers and the method used to attract the loyal customers its competitors such as Marks and Spencers ( M&S), Sainsburys and Waitrose? 5) How are the online retailing arm Tesco.com and its new Argos-style catalogue service boosting Tesco Direct sales and market share for Tesco CRM and how they transform customers habits?

1.4. Significance
The result of this study can potentially ensure the use of the optimum IT systems that will enhance performance levels and ensure that financial services companies can remain competitive by using the appropriate IT systems that are customised for their needs. It will enable an understanding of the relationship between IT technology, it development and the impact it has financial services. It will also provide an insight into whether IT is developing too fast for financial services industry and whether the financial services industry should keep abreast with IT developments or use the technology that suits their needs

2. Background and Literature Review

2.1.Introduction
Customer Relationship Management (CRM) has in the main been taken to generate a competitive edge for an organisation, as well as to have a 11

positive impact on organisational performance. Nevertheless, there is still much debate over exactly what the makeup is. This supports the high amount of research and the focus that the concept has continued to experience in recent times, more or so the commencement of the deregulation of financial services related sectors in the midst 1980. In fact, definitions of CRM are everywhere, and, different and therefore has no one meaning in its strictest sense. This study seeks to find out why customers continued to shop at the market leader stores amidst the fierce competition that is facing the industry and to explore the relationships that keep customers loyal to the store. The overall reason for the research is to find out how the market leader continued to position and reposition its marketing strategies so as to know, keep and maintain customers and how CRM can continue to contribute and assist the store to retain its customer base for long-term benefits for both parties. This chapter is divided into three parts. The first part examines an overview of Tesco as a company. It looks into the fierce competition the industry is experiencing from competitors and the pricing strategy it adopts to continue win more customers and customer loyalty. The second part looks at customer relationship management from a general perspective, CRM in business, relationship marketing and CRM, CRM at Tesco and the reasons for implementing CRM in businesses. The third and final part focuses on managing customer relationships, the rewards (benefits) of CRM, problems and challenges of CRM, the CRM situation in the future and the conclusions drawn from the concept.

2.2.Tesco an Overview
Tesco was originated in the markets of Londons East End, where in 1914, war veteran Jack Cohen began to sell groceries. The brand name of Tesco first appeared on packets of tea in the 1920s. Tesco has seen a rapid 12

growth and transformation over the years to become the UK most profitable and giant supermarket and overtook Sainsbury in 1995. In 200, Tesco has captured 15.6% of the grocery market in the UK, which increased to 28% in2004 and it currently controls over 34% of the UK grocery market (UK, 2004). Tesco now operates 2318 stores in twelve countries and has over 328, 000 employees and is now the principal private employer in the UK. In recent years Tescos business growth was based on abroad expansion and on trading in merchandise other than foods. Tescos success in UK has been mainly been built on low prices, customer loyalty and expansion into other markets such as banking, insurance and telecommunication. This diversification has been a great success that 20% of giant market leader sales in 2004 were from non food. Tesco is the largest petrol retailer and it operates Tesco Finance in association with Royal bank of Scotland, and Tesco.com services (Tesco.com, 2010). Tesco is the number one food retailer in the UK with stores in UK, Europe and Asia. Tesco also offers financial services and products, insurance and banking services and many varied services. Tesco is the largest petrol retailer and it operates Tesco Finance in association with Royal bank of Scotland, and Tesco.com services (Tesco.com, 2010). Tesco is the number one food retailer in the UK with stores in UK, Europe and Asia. Tesco also offers financial services and products, insurance and banking services and many varied services. In 2004, the company announced that it was purchasing the family-run chain Adminstore, which operates the Europa, Harts and Cullens grocery outlets in the London area, for 53.7 million. By April 2004, Tesco faced a hurdle in its acquisition of Adminstore, even though the Office of Fair Trading (OFT) cleared its bid, as the federation of Wholesale Distributions (FWD) attempted to block the deal. The FWD argue that the OFTs decision was flawed since the acquisition would make it virtually impossible for independent retailers to open new stores in central London 13

(http://web.ebscohost.com/ehost/detail?vid=5&hid=112&sid=04bfca2632d1-4eb2-b343- c1fe7c1f3b6e %40sessionmgr103&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d %3d#db=bth&AN=36585680) Tesco is the number one food retailer in the UK with stores in UK, Europe and Asia. Tesco also offers financial services and products, insurance and banking services, Telecommunication products and many varied services. The main strength of Tesco is its huge and increasing share of the market in the UK. Tescos dominant share of the food retail service and its increasing share of the retail market will enable Tesco to expand even more and gain an even bigger share of the non food market. This will see a continuous increase in revenues. Tesco also operates tesco.com (Tesco.com, 2011) which covers 96% of the UK. The Tesco.com is very successful with more than a million households having used it. This is another platform from which Tesco can derive huge revenues. Tescos has a firm and unassailable share of the UK market which has seen its sales of 71% more than Sainsburys, which makes it difficult for its competitors to compete One of the weaknesses of Tesco is that it is too reliant on the UK market and any changes in the UK market can have a direct impact on Tesco. Any merger of Tescos competitors can threaten Tesco as the dominant force in the UK market. The continued expansion of Tesco imposes restrictions on available money other operations and there is the danger that Tescos expansion and acquisition of other companies can reduce revenues and reduce quality of its products and services. There is also the perception by many consumers of Tesco products being of low quality. There is however, an opportunity to increase its share of the retail market. This can be achieved by using its market share and low cost brand and advertising skills to spur growth. There is also the opportunity the opportunity overseas growth to increase earnings, develop its telecoms business, UK health and beauty ranges. Tesco is has millions of Clubcard users which offers it the opportunity to have invaluable insight in general 14

and personal consumer spending patterns which can be used to tailor marketing campaigns with great effect. There are threats that Tesco has to be aware of and which it should manage. The potential price war between its main competitors can lead to a reduction in profitability. Asda, since being bought by Walmart is a major competitor capable of competing with Tesco on price and variety of food items, and the parent company is threat to the Tesco brand. Tescos debts may increase due to its growth which is expensive. Additionally, any new brands needs investment and well coordinated marketing campaigns, which are expensive.

2.2.1.Competition at Tesco

In the current business atmosphere, there are threats that Tesco has to be aware of and which it should manage. The potential price war between its main competitors can lead to a reduction in profitability. Asda, since being bought by Walmart is a major competitor capable of competing with Tesco on price and variety of food items, and the parent company is threat to the Tesco brand. Tescos debts may increase due to its growth which is expensive. Additionally, any new brands needs investment and well coordinated marketing campaigns, which are expensive. Tesco is has millions of Clubcard users which offers it the opportunity to have invaluable insight in general and personal consumer spending patterns which can be used to tailor marketing campaigns with great effect. Due to the current market fragility that businesses continue to face as result fierce competition for increased revenue growth and customer growth and retention, business of all kinds have embarked on product brand positioning in order to win more customers. Tesco, on its part, introduced the Tesco finest in 1998 and this has helped the giant store to continue to win new businesses and more customers to establish a market leader position.

15

Although Tesco's Finest was the first to be launched, Sainsburys Taste the difference was launched in 2000 (sainsbury, 2000). The Sainsburys taste the difference brands has more than 350 foods and has a product range that consists of products from all around the store, including bread, ready meals, fruit and vegetables, cheese, meat and grocery items. In 2010, Sainsbury overhauled its Taste the Difference and re-launched it in a multimillion pound campaign which saw the range expanded from 150 lines to 1,141 products ((Hall & Wallop, 2010). The range was re-energized by the introduction of products such as slow cooked lamb shanks, roast pork belly and endorsement from the celebrity chef Jamie Oliver (Sweney, 2010). The re-launched also focused around the new Bistro line of restaurant-quality food, which consists of 23 products designed to appeal to shoppers who are eating out less. Asda also launched its Asda Extra special in 2004 which however concentrated more on its mid range brands named Chosen by You. This helped Asda post a 1.3% like-for-like sales growth in the three months to the end of September 2010 (Burrows, 2010)). Morrison on the other hand, changed the packaging and design of its label The Best in 2008. Its The Best brand was launched in 2005. Tescos retail positioning is unique, primarily due to its sheer size. The extent of its retail reach and buying power is enormous, and coupled with perhaps the strongest and most visible brand on the British high street; this allowed the company to easily move into other areas of retailing. Tesco aims for a total positioning, and to appeal to every conceivable part of the UK consumer base. The retailer aims to maximise the potential of the local consumer base for its stores. For example, the Tesco outlet in Brixton, an area of London with a large share of the population coming from ethnic minorities, offers a wide range of Afro-Caribbean and Asian produce. This reflects the companys strategy of aiming to be all things to all consumers. Similarly, the companys pricing strategy is also regionspecific, with lower prices offered in lower-income areas and higher prices in more affluent areas across the majority of its formats 16

2.2.2.Pricing strategies

Pricing is very important in the consumer market, and it provides one of the most important forms of information available to consumers when making a purchasing decision ((Jin & Sternquist, 2002). Prices of established brands and private label differs among different retailers and certain products types. According to (Davies & Brito, 2002), although price variations tend to have a big impact on pricing decisions private labelled brands still enjoy about 20 to 44% higher gross profit margins than established brands. Several factors are involved in these higher profit margins enjoyed by the private label brands like Tesco Finest. The reasons include cost saving in research and development budget, product launch and their advertising budget is comparatively very low. Despite the less cost, the private label brand can still command premium price. Constant and innovative promotions and targeted and mobile marketing campaigns of privately labelled brands may sway consumers to become aware of price variation which may eventually and potentially result in a trade down of a privately labelled item, which according to (Steenkamp & Dekimpe, 1997) result in deal seekers becoming regular purchasers of privately labelled brands over time. Consequently, and as a result of this pricing awareness of customers, many lines of Tesco Finest brands get compared to regular, value Tesco brands, and sometimes even compared to well-established manufacturers brands. Although Tesco Finest brands can command premium prices given that their notion of exclusiveness, they get stiff competition from their competitors and indeed from within the same store from the Tesco valued brands. Brand position of the Tesco Finest is also another critical business pillar.

2.2.3.Tescos Brand Position

Tesco continues to invest heavily in cutting prices and increasing promotional activity. It launched its Discount Brands private label line in order to help families with limited budgets over the course of the recession. This range was launched in an attempt to challenge cut-price 17

German discounters Aldi and Lidl. The goods on offer within the range are priced at a higher level than Tescos Value line, but at a cheaper level than its Finest line. Tescos private label products successfully appeal to a wide cross-section of consumers in the UK. The company offers distinct ranges of private label products, from Value to Finest, with these priced in order to attract as wide a consumer base as possible. In its packaged food range, Tesco also features the Healthy Living, Organic and Whole foods ranges, with these aimed at more health-conscious consumers Over the years and most particularly, the last two decades have seen a change in positioning of retailer own-brands. Originally introduced as cheap, low-price alternatives to manufacturer brands, many retailer ownbrands are now shifting to premium brands to reflect what de Chernatony described as the personality of stores (de Chernatony, 1988). This changing position of retailer own-brands appears to result from the fact that retailers now take an active role in developing and marketing their own proprietary brands rather than being a passive distributor of brands. Tesco's strategy for the recession was focused on low prices and its Clubcard loyalty scheme, but this was in addition to Tesco looking to the premium marketing positioning (Burrows, 2010). The market positioning of premium store brands provides consumers with a high value-added products with an innovative design and sometimes even higher quality than other brands. For example Tesco Finest Premier Cru champagne was named the best non vintage champagne at the 2005 International Wine Challenge (Steenkamp & Dekimpe, 1997). Therefore, and taking the position factor into consideration, premium store brands like Tesco Finest are often not priced lower than other brands (Laaksonen & Reynolds, 1994). With widespread acceptance, particularly in the UK, these premium own-brands are designed to compete with leading brands while at the same time differentiating their Tesco brands from other brands. Notwithstanding their success, there is still scope for growth.

18

2.2.4.Customer Retention

Customer retention has been shown to be a primary goal in firms that practice relationship marketing (Gronroos, 1991; Coviello et al., 2002). While the precise meaning and measurement of customer retention can vary between industries and firms (Aspinall et al., 2001) there appears to be a general consensus that focusing on customer retention can yield several economic benefits (Dawkins and Reichheld, 1990; Reichheld, 1996; Buttle, 2004). As customer tenure lengthens, the volumes purchased grow and customer referrals increase. Simultaneously, relationship maintenance costs fall as both customer and supplier learn more about each other. Because fewer customers churn, customer replacement costs fall. Finally, retained customers may pay higher prices than newly acquired customers, and are less likely to receive discounted offers that are often made to acquire new customers. All of these conditions combine to increase the net present value of retained customers. Lindgreen et al. (2000, p. 295), for example, compute that it can be [up to] ten times more expensive to win a customer than to retain a customer and the cost of bringing a new customer to the same level of profitability as the lost one is up to 16 times more..

Figure 7 Customer Retention: Building long-term relationships

No. 11/12, 2004

Source: Karin A. Venetis et al (2004) European Journal of Marketing Vol. 38

Customers are able to access information, using anywhere, anytime technologies, that were previously scarce or at least difficult to access. Thus, customer expectations of employees in service organisations have 19

increased because customers have become more knowledgeable about the products and services available to them. This influences customer choices about their use of service delivery channel in a multi-channel service delivery environment
2.2.5.Customer Loyalty

Customer loyalty presents a paradox. Many people view it as mainly an attitudinal base pattern that can be predisposed significantly by customer relationship management initiatives such as the increasing popular loyalty and affinity programs. In the case of Tesco, the use of Clubcards has increasingly made customers to stick to their store. At a very general level, loyalty is something that consumers may exhibit to brands, services, stores, products categories (cigarettes) and activities (swimming). In this context however, it is used to emphasize that loyalty is a feature of people (consumers) rather than something inherent in brands. Like CRM, there is still no universally accepted definition (Jacoby and Chestnut, 1978; Dick and Basu, 1994; Oliver, 1999). Instead there are three famous conceptualization as follows: I.Loyalty as primarily an attitude that sometimes leads to a relationship with a brand Model 1) II.Loyalty mainly expressed in terms of revealed behaviour (i.e. the pattern of past purchases (Model 2); and III. 1). Buying moderated by the individuals characteristics, circumstances, and/or the purchase situation (Model 3) (see figure

20

Figure 7 Conceptualization of customer loyalty Source: Uncles, M.D Customer loyalty programmes (2003) pp294-316, Vol.20 No.4

and

customer

loyalty

With loyalty as primarily an attitude that sometimes leads to a relationship with the brand (Model 1) Many people argue that there must be strong attitudinal commitment to a brand for true loyalty to exist. This is seen as taking the form of a consistently favourable set of stated beliefs towards of the brand purchased as evident with the case of Tesco brand. These attitudes may be measured by asking how much people say they like the brand, feel committed to it relative to competing brands. To support the above notion and beliefs, Oliver (1997, p.392) defines customer loyalty as: A deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same brand or same brand-set purchasing despite situational influences and marketing efforts having the potential to cause switching behaviour. An extension of the attitudes define loyalty perspective is to suggest 21

that consumers form relationships with some of their brands. Loyalty mainly in terms of revealed behaviour (Model 2) Paradoxically, this model is arguably the most controversial but the best supported by data. The controversy comes about because loyalty in this model is defined mainly with reference to the pattern of past purchases with only secondary regard to the underlying consumer motivation or commitment to the brand (Fader and Hardie, 1996, Kahn et al; 1988) The attitude approach taken by Tesco aims to increase sales by enhancing beliefs about the brand and strengthening the emotional commitment of their customers to their brand. It suggests that most consumers have split-loyalty portfolios of habitually-bought brands. Here it is assumed that consumers tend to view advertising and other forms of marketing communication more as publicity that sustains awareness and offers reinforcement, rather than as highly persuasive information that fundamentally change their attitudes and/or levels of commitment (Ehrenberg et al..; 1998; Brown, 2000). Loyalty programmes also designed to strengthen commitment and create velvet handcuffs to bond the customer to the brand. This way of thinking has become commonplace in communication, branding and CRM textbooks. Buying moderated by the individuals characteristics, circumstances, and/or the purchase situation (Model 3) Supporters of this model, the contingency approach, argue that the best conceptualisation of loyalty is to allow the relationship between attitude and behaviour to be moderated by contingency variables such as the individuals current circumstances, their characteristics, and/or the purchase situation faced. This is not to suggest that attitudes will not form towards these brands over time (model 1), but they will be of secondary importance to the functional adequacy of the brand. The Tesco Clubcard scheme is regarded as a financial success and has continued to help push and grow the size (and thus sales revenue) of a typical brand when used in combination with other marketing programmes. This is especially in terms of cross-selling and up-selling, although this success is also closely linked to the high-profile advertising, 22

product range extension, and strategic developments in the management of Tesco (Broadbent, 2000; East and Hogg, 1997)

2.3.Overview Definitions of Customer Relationship Management

Customer Relationship Management (CRM) is really too young to be fully formed yet and what it is rather depends on who you happen to be talking to or who is trying to sell it to you (McDonald, 2007:388). Definitions of CRM are everywhere, and different. It all depends on which perspectives one is looking at. McDonald (2007) offers a selection of what could be referred to as CRM. CRM can be defined as consistent high-quality customer support across all communication channels and business functions, based on common information shared by employees, their customers and business partners. This means it is focuses on customer support across towards satisfying customers needs using all the available channels of communication within the organization setup. In another aspect, the term Customer Relationship Management has been defined by Foss & Stone (2002) as the business strategy and mode of operation deployed to maintain and develop relationship with profitable customers, and manage the cost of doing business with less profitable customers. This means that organizations must have strategies of identifying, knowing and retaining their valuable customers in order to increase their long-term operational efficiencies and profitability at all levels of business operations and also finds solutions to reduce the operational costs with less valuable and profitable ones. Referring to the works of McDonald (2007:p388), another dimension of CRM is, it is a continuous performance initiative to increase a companys knowledge of its customers, which seeks to integrate, and enhances multiple-delivery channel that allows companies to capture profitable new customers and improve service on existing customers. This means it is an integrated process that is aimed at continuously improvising ways of knowing an organizations customers and how to attract new ones by utilizing your capabilities and competencies. 23

Research has shown in general that according to companies, their CRM initiatives are focused on improving customer service, increasing revenue, improving retention, and getting an enterprise-wide view of the customer. While there are many paths that companies can take to achieve those objectives, many start at the same point: creating a unified view of their customers across sales, service, and marketing departments (Dynia, 2002). Carriers want their CRM initiatives to help establish a single view of a customer or household with constantly updated information that can be seen by sales, marketing, and service functions. Such information could be used for cross selling, up selling, product development, and target marketing. The system should ensure that customers will never be orphaned and will receive excellent customer service (Dynia, 2002).

2.3.1.An Overview of the Conceptual Development of Customer Relationship Management.

Customer Relationship Management (CRM) has generally been assumed to create a competitive edge for an organisation, as well as to have a positive impact on organisational performance. However, there is still much debate over exactly what constitutes CRM. In fact, many scholars have claimed that the precise meaning of CRM is not always clear in the literature (McDonald, 2007; Nevin, 1995; Parvatiyar and Sheth, 2001). Furthermore, Nevin (1995), Luck and Lancaster (2003) note that the term has become a buzzword, with the concept being used to reflect a number of differing themes or perspectives. For example, at tactical level, CRM may mean an electronic marketing (Blattberg and Deighton, 1991) or a technology or software solution that helps track data and information (data base marketing) about customers to enable better customer service. Others think of CRM, or one to- one, as an elaborate marketing or customer service discipline (Peppers and Rogers, 1995 and 2004). At a strategic level, CRM may mean customer retention or customer partnering (Peppers and Rogers, 1993; Vavra, 1992). At a theoretical level, CRM may mean an emerging research paradigm in marketing (Parvatiyar and Sheth, 2001). Thus a clarification and conceptualization of what CRM actually means is needed to ensure that our knowledge of CRM grows in a snowballing 24

manner. Moreover, while we note and observe that there has been an increase in the focus paid to CRM by practitioners and academics, to date no systematic attempt has been made to develop a valid measure of it, or to assess its influence on business performance. Given these problems, CRM as an emerging paradigm in marketing, will remain underdeveloped until its key dimensions have been identified and operationalised. In fact, Gummesson (2002a) observes that CRM, as an upand-coming discipline, is in need of further theoretical development.

Figure 7: The Four Dimensions of Customer Relationships Management

Source: Sin, LYM et al (2003) CRM: Conceptual and scale of development The identification of the fundamental dimensions of CRM is therefore very paramount. It is no longer sufficient to advise practitioners or researchers that the key to successful marketing is through CRM without providing information on what dimensions actually constitute relationships upon which CRM can be considered to exist (cited from Sin, et al, 2004).
2.3.2.Customer Relationship Management in Business

CRM is an information system that tracks customers interactions with the firm and allows employees to instantly pull up information about customers such as past and current sales and/or service records, outstanding records or unsolved problem calls. 25

Figure 7: Classification of framework for CRM articles (Composition of CRM)

Source: Kincaid, J.W. (2003), Customer Relationship Management: Getting

it Right!, Prentice-Hall PTR, Upper Saddle River, NJ.

A CRM system stores all information about its customers in a data base. This agrees with the concept put forward by peppers & Rogers (1995 & 2004) that describes CRM to mean a number of differing themes or perspectives. Again this supports the reasoning argued by McDonald (2007) that CRM rather depends on who you happen to be talking to or who is trying to sell it you for one to understand the meaning attached to it. Information such as customer names, what they bought, and what problems they have had with their purchases, is retained in a CRM database. The system not only uses this data to generate simple reports but can produce critical information to help coordinate sales, marketing, and customer service departments to better and faster serve customers needs. Freeland (2003) suggests that companies should define the goal of implementing CRM in their businesses. He proposed the following 2 goals: 1). Guiding principles - Organisations who want to reshape the focus of their CRM programs should follow these three guiding principles: Customer experience is essential to creating brand value i.e. by doing something with their logos or catchy styles that can give 26

customers the impression or awareness that it is their product or service. Customer insight should inform and drive customer treatment. Every contact that the company has with its customers determines the economic value of its future. CRM programs should be executed in a pragmatic way that mitigates financial and delivery risk. CRM programs should be planned according to both financial ability and risk elimination to the best of companys practice. 2). Components for success. To achieve these, organisations should Organize their CRM initiatives around the following four components: Setting the strategy. Identifying the customers that the company wants based on its existing business corporate mission. Gaining customer insights. The ability to understand customer needs and accurately predict their behaviour. Realizing greater value from customer contact activities. Improving the quality of customer interactions while at the same time driving down the cost of service. Transforming marketing. Identifying where money is being wasted or misspent on the market while ignoring the market noise to efficiently quantify and optimize all resources.

2.3.3.Relationship Marketing and CRM

Although past studies have made significant progress toward understanding the importance of cooperative and collaborative relationships between buyers and sellers (e.g. Berry, 1983, 1995, 2002; Crosby et al., 1990; Dwyer et al., 1987; Hart and Johnson, 1999; Morgan and Hunt, 1994; Palmer, 2000; Parvatiyar and Sheth, 1995)(cited from sin et al,2004). There are still some questions remaining to trash out: 27

What precisely is CRM? How can it be implemented properly in a business organisation?

In the marketing literature, the terms CRM and relationship marketing are used almost interchangeably (Parvatiyar and Sheth, 2000). For example, Berry (1983) defines relationship marketing as attracting, maintaining and enhancing customer relationships. Harker (1999) proposes the following definition: An organization engaged in proactively creating, developing and maintaining committed, interactive and profitable exchanges with selected customers (partners) over time is engaged in relationship marketing. Recently, by broadening the scope of relationship marketing and viewing it in a comprehensive management and social context, Gummesson (2002b) defines it as marketing based on relationships, networks and interaction, recognizing that marketing is embedded in the total management of the networks of the selling organization, the market and society. It is directed to long term win-win relationships with individual customers, and value is jointly created between the parties involved. On the other hand, Jackson (1985) suggests CRM to mean marketing oriented toward strong, lasting relationships with individual accounts. Payne (2000) asserts that CRM is concerned with the creation, development and enhancement of individualized customer relationships with carefully targeted customers and customer groups resulting in maximizing their total customer life-time value. Kotler and Armstrong (2004) define CRM as the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Although the above definitions differ somewhat, they all indicate that the core theme of CRM and relationship marketing perspectives revolves around its focus on individual buyer-seller relationships, that these relationships are longitudinal in nature, and that both parties benefit in the relationship 28

established. In short, from a firms perspective, both the CRM and relationship marketing concept can be viewed as a distinct organizational culture/value that puts the buyer-seller relationship at the center of the firms strategic or operational thinking. In spite of the commonalities described above, some important differences between CRM and relationship marketing do exist: first, relationship marketing is relatively more strategic in nature, whilst CRM is used in a more tactical sense (Ryals and Payne, 2001; Zablah et al., 2004). Second, relationship marketing is relatively more emotional and behavioural, centering on such variables as bonding, empathy, reciprocity, and trust (Yau et al., 2000). On the other hand, CRM is more managerial per se, focusing on how management can make concerted efforts in attracting, maintaining, and enhancing customer relationships.

2.3.4.Customer Relationship Management at Tesco The goal of every enterprise, once you strip away all the activities that keep a business busy every day, is simply to get, keep, and grow customers. Whether a business focuses its effort on product innovation, operational efficiency and low price, or customer intimacy, that firm must have customers or the enterprise isnt a business its a hobby. This is true for nonprofits (where the customers may be donors or volunteers as well as for firms large and small, for public as well as private enterprise (Peppers & Rogers, 2004)

Figure 7: Customer Relationship Management conceptual model Sources: Mercedes Marzo-Navarro et al (2004) pp.425 - 436 29

Over the past decade new technology, global economics, and regulatory tightening have put pressure on the financial services industry to evolve how it approaches customers. Change is occurring across the spectrum of segments from retail consumers to commercial customers, from private clients to institutions, and their brokers and agents. Customers and partners are savvier today than ever before, in terms of their level of financial knowledge, needs, and their service expectations. Yet satisfaction levels have not kept pace, which means financial institutions have put themselves at risk of losing customers (http://search.live.com/results.aspx?q=CRM+media&src=IE-SearchBox). In this regards, businesses including Tesco need to hedge against the risk of losing customers by coming up with management techniques of how to relate to their customers. This would entice customers to continue with loyalty and offer their businesses to the institutions that are outward looking and taking on board customer suggestions of future improvements. Some of these recommendations offered by customers enhanced the advent of an appropriate management tool of managing customers relationships for the achievement of organizations strategies and objectives.

2.3.5.Reasons for Implementing CRM

The motivating factors for companies moving towards Customer Relationship Management are numerous. The major considerations for companies to using CRM are to: Improve customer satisfaction level Retain existing customers and to improve customer lifetime value Providing better strategic information to sales, marketing, operations finance, etc Attracting new customers Cost savings

Researches over the years have shown that it is mostly costly to gain a new customer than retaining an existing customer. Several authors highlight the strategic advantage of maintaining the customer base as opposed to merely attracting new customers (Luck and Lancaster, 2003; Rowley, 2004). For example, Kandampully and duddy (1999) quote that it 30

costs five times more to attract a new customer than it does to keep an existing one. Zineldin (1999) argues that getting customers is important, but keeping and satisfying them is more important. Customer retention is less costly and, therefore, more profitable than customer attraction. It is generally believed that retention contributes to the creation of reputation, which in turn further lowers customer acquisition costs and thus increases profitability and growth.

2.4.Managing Customer Relationships in the financial services

The financial industry has faced unprecedented changes since the advent of the deregulation of the financial services industry in the midst 1980. Due to this development, Banks have evolved from providers of simple banking services to vast groups selling services that range from banking, insurance, loans and mortgages, through business advice to asset finance and fleet services. Competition for customers is fierce. Thus the need to develop business strategy that allows them to identify customers, differentiate customers, interact with customers and then provide customise treatment to their customers for the long-term relationship and profitability. The objective for client-facing staff in banking is to understand, own and then maximise and manage customer relationships: their biggest asset and then offer them high service qualities in order to keep them satisfy and retain them (Rust and Zahorik, 1993).

2.4.1.Types of Customer Relationship Management

CRM allows a company to address all of the types of customers it serves at different points in their life cycle and to choose the marketing program that best fits a customers attitude toward the company and willingness to purchase its products and services. Brown (2000) identified four types of CRM programs that enable the company to win back customers who have defected or are planning to or to create loyalty among existing customers, 31

to up-sell or cross-sell services to these customers and to prospect for new customers. Win Back or Save This is the process of convincing a customer to stay with the organisation at the point they are discontinuing service or convincing them to rejoin once they have left. Of the four categories, win back is the most-time sensitive. Selectivity is the other essential characteristic of a successful win-back campaign. Leading organisations often filter their prospects for contact to exclude customers who have frequently switched (churners), who have bad credit ratings or whose usage is low. To preserve the revenue stream and prevent the customer from becoming a traditional win-back candidate, a few organisations are now including partial disconnects and reduced usage customers in their win-back campaigns. Prospecting Prospecting is the effort to win new, first-time customers. Apart from the offer itself, the three most critical elements of a prospecting campaign are segmentation, selectivity and sources. It is essential to develop an effective needs-based segmentation model that allows the organisation to effectively target the offer. Without a focus, organisations either fails to achieve an adequate acceptance or rate on the offer or spends too much on promotions, advertising and concessionary pricing, in a bit to have penetrating market share. Loyalty This is the category in which it is most difficult to gain accurate measures. The organisation is trying to prevent customers from leaving and uses three essential elements: Value-based and needs-based segmentation and predictive churn models. Value-based segmentation allows the organisation to determine how much it is willing to invest in retaining a customers loyalty. Once the customer has passed the value-based segmentation screening, the organisation can use needs-based segmentation to offer a customize loyalty program. Affinity programs, such as airline miles and hotel points, 32

are some of the most popular. Other programs offered include customised billing, special help lines or back-end loaded credits as a means of encouraging loyalty. The final component of the successful loyalty campaign is the development of a predictive churn model. This is achieved by using the vast amount of demographic data and usage available for the existing base of customers. Cross- Sell / Up- Sell This CRM program is also known as increasing wallet share or the amount the customer spends with you. The purpose is to identify complementary offerings that a customer would like. For instance, a basic long- distance customer could be a candidate to buy Internet access. Up-selling is similar, but instead of offering a complementary product, the organisation offers an enhanced one. For example, replacing an analogue data line with ISDN is a good example of an up-sell.

2.4.2.Benefits (Rewards) of Customer Relationship Management

CRM is first and foremost a business philosophy or strategy where all activities in the company are driven by the needs of the customer. This means the objective of CRM is to build and maintain relationships with customers. In order to maintain relationships, promises have been made and kept so as to win customers loyalty (Gronroos, 1990), and the loyalty won from customers would enhance new promises to be made for the benefit of both parties in the future. Osborne (2002) identified some of the key benefits of CRM as follows: Customer Enhanced understanding and forecasting of customer behavior and needs Precise customer targeting Improved customer service Increased customer retention, win-back rate, acquisition, and cross-sell capabilities Decreased churn rate 33

Financial Reduced marketing and sales cost Better tracking and evaluation capabilities Lower communication cost Increased efficiency through supply chain management These benefits run across the board for all types of customers, including the student market which is the focus of this research. The student segment has a limited financial services needs and uses basic services, which are dominantly money transmission focused and may involve limited lending. In addition, students have been found to prefer free banking and free overdrafts to interest on credit accounts (Lewis and Bingham, 1991). However, Thwaites and Vere (1995), suggested that the student segment may use similar products but have different preferences for how they deal with a bank and, by implication, the extent to which they wish to develop a relationship with a bank. In short, and to borrow Kotlers (1997) metaphor, organisations must have achieved marketing enlightenment in order to implement relational approach effectively with customers.
2.4.3.Problems/challenges of Customer Relationship Management

Despite the above identified benefits, organisations seeking the benefits of CRM face considerable challenges and setbacks if CRM is handled and managed. Peelen (2005), Dibb and Meadows (2001), Perrien and Richard (1995) and McDonald (2007) identified the following key potential challenges and impediments: The firms understanding of the customer base and /or technological resource for managing the information may be inadequate and, as such its structure may be insufficiently decentralised to encourage a relationship approach and too inflexible to adapt. Policies for managing human resources may impede the recruitment and training of suitable staff. This could have serious impacts on 34

implementing a CRM strategy. There could be a lack of commitment from people within the company to the implementation of a CRM solution. Adapting to a customer-focused approach may require a cultural change. There is a danger that relationships with customers will break down somewhere along the line, unless everyone in the business is committed to viewing their operations from the customers' perspective. The result is customer dissatisfaction and eventual loss of revenue. Poor communication can prevent buy-in. In order to make CRM work, all the relevant people in the business must know what information is needed and how to use it. Weak leadership could cause problems for any CRM implementation plan. The onus is on management to lead by example and push for a customer focus on every project. If a proposed plan isn't right for your customers, don't do it. Send your teams back to the drawing board to come up with a solution that will work.
2.4.4.The future of Customer Relationship Management

In just a few years Customer Relationship Management has emerged as a powerful business trend. However, the best is yet to come. CRM customers are also demanding more and more knowledge management functionality. In short, the future of CRM is bright indeed. CRM will become deeply ingrained as a business strategy for most companies. Technology will evolve while technical and organizational challenges are overcome. Much will change in the years ahead, but one thing is certain: CRM is a journey, not a destination, and customers have their hands on the road map and the steering wheel. The rest is up to you. Are you ready?

35

2.4.5.Conclusions

Customer Relationship Management (CRM) has been in existence for a long time, however, it did not come into its name and officially gain momentum especially in terms of its name - until the 1990s. CRM is the management of relationships between the firm and its customers in order for both the company and its customers to receive maximum value from the relationship (Gupta et al, 2004; McLeod and Schell, 2004). Gupta et al (2004) further went on to state that: It is important to cultivate long-term customer relationships as it costs substantially less to keep an existing customer as opposed to obtaining a new one. In another dimension, the term CRM has been defined by Jackson (2005) as CRM is a business strategy evolved to manage the development of a company, the acquisition and retention of its customers and to create long-term value between them, thus supporting the arguments made by Luck and Lancaster (2003) that CRM has become a buzzword, with the concept being used to reflect a number of differing themes or perspectives. Developing and maintaining customer satisfaction should lead to deeper relationships with customers where customer loyalty is increased and there is a good prospect of attracting potential customers (Turban et al, 2004). It is important to note that CRM is a complex area and is certainly an interdisciplinary field, i.e. marketing management (Ryals and Payne 2001). This means the term may have several meanings to several people, thereby making its precise meaning shadowy. The term can be used to reflect differing perspectives in all walks of life, and what it is rather depends on who you happen to be talking to - who is trying to sell to you (McDonald, 2007). There are many aspects of CRM which were mistakenly thought to be capable of being implemented in isolation from each other. CRM can therefore, only be successfully implemented if it receives the full 36

commitment of all the stakeholders. When someone mentions CRM, we immediately think of technologies that could improve marketing, sales, customer services and customer relations. However, CRM is more than just technologies, it is a strategic process. CRM helps companies better understand their customers needs so they can provide these needs to their customers at the right time while improving the companys processes (The ABCs of CRM, 2005). From the outside of the organization, a customer experiences the business as one entity operating over extended periods of time. Thus piecemeal CRM implementation can come across to the customer as unsynchronized where employees and web sites and services are acting independently of one another, yet together represent a common entity. In a nutshell, CRM is a combination of philosophies, polices and strategies connecting different players within an organization so as to coordinate their efforts in creating an overall valuable series of experiences, products and services for the customer. In this regards, CRM can allow Tesco to gather student data swiftly, identify the most valuable student customers over time and increase customer loyalty by providing bespoke banking and facility services. It also reduces the cost of serving these customers and makes it easier to acquire similar customers (i.e. new international students) (Rigby & Ledingham 2004).

3. Methodology
3.1.Overview
This section describes the research methods undertaken and reported in this dissertation. This research method section deals with the different aspects of the research into customer relationship management (CRM). The main purpose of this research is the study and analysis of Tescos customer relationship management, which is an activity that has been 37

supporting the growth of Tesco to assist the giant supermarket to retain and improve on its market leadership. This section identifies and provides justification for the methodology used during the research. It specifically discusses the research options that were available and describes the reasoning behind the choices that were made in the design of the research, the data collection methodology, sampling and verification. The following subsections provide explanations for the theoretical and analytical basis for the choices that were made.

3.2.Research Design
Research design is a two tier process. The first level provides the logic for and helps to structure the research to enable the delivery of the evidence that is needed to answer the research question. The second level is concerned about data and evidence collection (McGivern, 2003). There are many research designs in the literature, of which case study and experimental research designs are common. A case study approach provides an in depth investigation of a case (McGivern, 2003) whilst the experimental research design methodology uses independent data and variables to measure effect (McGivern, 2003). This project is well aligned with the case study research design given that it is set out to determine the case/cause of Tesco brand success. The research design is a critical part of the research process because it enables the collection of the appropriate evidence that is used to answer the research question. But for this to be done effectively requires the specification of the type of evidence that should be collected to describe what it is that the research sets out to do and to answer the research question comprehensively. In order to get an answer to this research question, a qualitative research strategy that consisted of the study of the consumer companies and the services they offer was conducted in order to provide an understanding of the context in which branding occurs. A case study research strategy was used because it aligned well with the objective of the research of obtaining an in depth understanding of the Tesco Finest brand. This enabled a comprehensive study of Tesco which 38

gave context to the study and provided an understanding of the brand in the Tesco context.

3.3.Data Collection
The descriptive and qualitative research methodology was used because it goes more deeply into the research issue and enabled the accurate description of the characteristics and causes of what the research tries to explain (Robson, 2002). The quantitative approach was selected because the aim of this study was to investigate the consumers perceptions, attitudes and behaviours about the factors.
3.3.1.Primary data

A personal interview with a sample of carefully selected Tesco consumers and management was used as a vital source of primary data collection (see Appendix B: Interview Questions). An interview with primary source allows more detailed questions to be asked and ensures that answers to questions are responded to. It is however expensive, and its outcome can be influenced by bias and cheating by the interviewer if not conducted properly. A questionnaire was also used for primary data collection because it is cost effective, eliminates researchers bias and results in more accurate answers. It is a structured technique for data collection consisting of a series of questions, written or verbal, that a respondent answers (Malhotra & Birks, 2006). Defining clear research questions is one of the key criteria for a successful research process as emphasized by Nutbrown (Clough & Nutbrown, 2007). However, the main disadvantages of this type of primary data collection methodology are its low response rates, and it can lead to some unanswered questions and sometimes in accurate answers. In order to benefit from the advantages of this type of primary data collection, a specially designed questionnaire was used (see Appendix C: Questionnaire). The questionnaires of the required sample size (see data 39

sampling section) were distributed at a number of Tesco stores. The stores were chose due to location accessibility and friendliness of customers and research was mainly conducted during the evening and weekends. Given that this type of data collection results in low response rates, the researcher ensured an increase response rate by personally distributing and collecting questionnaires at Tesco stores and handing. Telephone interviews as a means of data collection was not used because even though it would have saved time and reduced bias, it limits the depth and the length of the interview and customers reluctance to share personal data limits this data collection method. Email communications with customers and Tesco management was also not used for similar reasons The questionnaire was made up of 14 questions which were clear and easy to understand. The purpose of the questionnaire was to investigate the level of brand awareness, competitiveness, and perception by customers. It also investigated customer shopping habits. The questionnaire was designed such that it took not more than 10 minutes on average to complete.
3.3.2.Secondary data

Secondary data collection method was by the use of journal articles, news paper articles and business books. Collecting secondary data was straightforward given that many articles, journals and books are written on Tesco and Store brands. Tescos Annual Report and review was also an excellent source of relevant information. Secondary research is a use of previously existing resources to meet the research goals (Grossnickle & Raskin, 2001) and it is a cost effective way of obtaining certain types of data. The collected secondary data was used to provide an understanding of the brand, and to study customer attitudes and behaviour

3.4.Data Sampling
Sampling is defined as ... the process of selecting without bias and with 40

as much precision as resources allow, the items or elements from which or from whom we wish to collect our data (McGivern, 2003). It involves the definition of the population, determination of frame, frequency and method of the sampling and the size of the samples. In this research the population of interest was limited to Tesco management and customers. In theory, the population chosen can provide the data that will enable the drawing of conclusions relevant to the research (Jankowicz, 2000). The sampling frame is vital as it contains all the elements of interest (McGivern, 2003). This work used a sample frame of all Tesco stores in England with particular emphasis on the store at Harlow. A probability sampling method was used by selecting customers and Tesco management as random. The benefit of this type of sampling type is that it can be used to project the outcome to the whole customer base and management corps of Tesco. It enables the gathered data to be representative of the population that interest us which in this case is the Tesco customers (Wilson, 2006). Although this has the disadvantage of being more time consuming and increases costs, it was used because the results were then representative of the whole customer base. The determination of sample size is dependent on a number of issues such as financial issues (Wilson, 2006). The sample size used in this research was determined by financial and time constraints. A total of 85 samples were distributes from which 60 were returned. The design of the questionnaire was mainly focused on customer attitude, customer behaviour and customers perception of the brand and values associated with it.

3.5.Data Analysis
Gathered data was analysed and used to generate descriptive statistics and for each variable in the questionnaire and interview, the overall percentages (where applicable) were determined. As most of the questions are open-ended, the response to them were categorised and prioritized 41

based upon frequency of mention. In fact, the answers to the open ended questions provided the strongest and most important responses and provided customers and management the opportunity to express their opinions in their own words. The data collected was quantitatively and qualitatively analysed which enabled data to be sorted and structured according to its characteristics, structure and impact. The qualities analysis method was used to describe the general characteristics of the Tesco Fines brand and the quantitative approach was used to determine the characteristics.

3.6.Validity and Reliability

The validity and reliability of collected date is paramount. As a result all conducted interviews will be recorded with consent of interviewees to ensure accurate transcribing of the interview and standard interview protocols will be used to ensure repeatability by other researchers. All collected data from interview and from questionnaires will be reviewed and data found to be unduly biased or inaccurate will be discarded. The quality of research design can be evaluated through four criteria, namely internal validity, construct validity, external validity and reliability validity (Yin, 1994:18). Validity, according to Zikmund (2003:302) is the ability of a measure (for example, an attitude measure) to measure what is supposed to measure. Validity can be supported by building the data collection framework of the study. The internal validity refers to the reliance of the researchers conclusion as to whether the experimental treatment was the sole cause of observed changes in the dependent variable. Construct validity refers to establishing the correct operational measures for the concepts being studied. Referring to Collis and Hussey (2003:59), this relates to the problem that there are a number of phenomena which are not directly observable, such as motivation, satisfaction, behaviour, attitude, ambition and anxiety. These are known as hypothetical constructs which are assumed to exist as factors which explain observable 42

phenomena. In the present study, to meet the construct validity, both customer retention and customer satisfaction variables in relation to the student market are assessed and studied separately from the other customer relationship variables, but also related to the other issues of customer relationship management practices of the financial services provider. Furthermore, construct validity is increased by the use of multiple sources of evidence. Interviews of key bank decision- makers have been conducted to clarify some specific issues. Additional sources of evidence include third parties contacts, archival documents, brochures, bulletins and Tescos customers statistics. The aim of the interviews are to obtain as a true a record as possible of what customers perceived of particular issues, e.g. customer relationship management practices at Tesco supermarket, (Lindsay, 1997:33-41). External validity is the quality of being able to generalize beyond the data of an experiment to other subjects or other groups in the population under study. Generalization, as it is sometimes referred to, is the extent to which you can come to conclusions about one thing (Collis & Hussey, 2003:59). However, Gummerson (1991, cited in Collis & Hussey, 2003:60) argues that using statistics to generalize from a sample to a population is just one type of generalization; in a phenomenological study you may be able to generalize from one setting to another. He supports the views of Normann (1970, cited in Collis & Hussey, 2003:60) who contends that it is possible to generalize from a very few cases, or even a single case, if your analysis has captured the interactions and the characteristics of the phenomena you are studying. One of the aims of the current study is What is it that Tesco does to keep and retain customers and what add-ons facilities/services does Tesco offer to gain customer loyalty and why new customers shop with the store? 43

With regard to the results, generalization is attempted by concluding the results of the subunits of the study and returning to the original phenomenon of interest, namely customer relationship management Tesco. The generalization of the results is rather high within the respondents in relation to the customer relationship management practices. The respondent sample represented over 80% of the targeted customer and management market and this indicates a high response rate. However, data does not allow the analysis of single variable or respondents by statistical analysis. Thus the results have to be interpreted with the help of a qualitative approach. Finally, reliability refers to demonstrating that the same results could be obtained if the data collection procedure is repeated again (Yin, 1994:36). Easterby-Smith et al (2002, cited in Saunders et al 2003:252) supports Yins views and thus said, In relation to qualitative research, reliability is concerned with whether alternative researchers would reveal similar information, if they are to carry out similar data collection procedures.

The data collection is not dependent on the investigator but the data is obtainable by identical procedure. A prerequisite for reliability criteria is that the research procedure is well documented. That is the very objective of the present chapter. Observing the same phenomena in the same setting should also provide similar information, as some of the

interviewees are Tesco Management, staff and professionals and others hold key managerial positions in businesses and there is no reason to expect that they had not understood the interview questionnaires.

44

3.7.Limitations
This research was subject to the following limitations. Customers who completed the questionnaires might not willingly provide truthful and correct answers given the suspicion that most people have of Tesco. In fact, recent antagonism towards Tesco due to their aggressive expansion might lead some customers to deliberately not provide truthful answers as they might wrongly construe the data collection exercise as sanctioned by Tesco. However, the letter in the Appendix explaining the purpose of the research was designed to limit the impact of this limitation. The taking of notes during personal interviews can be very time consuming and tedious and getting busy management staff for a long interview is difficult. To reduce this limitation, the recorders were used during interviews with prior consent of interviewees. There were limitations on the number of sample used and on the locations of sampling due to financial constraints. However, the use of probability sampling was used to reduce this limitation. The time used for the data collection was also limited due to a limit on the duration of the research.

3.8.Ethical and Legal Considerations

The research and data collection involved interaction with customers and the process therefore had to comply with standards of code of conduct. Additionally, the confidentiality of collected data was assured and all customers and Tesco management staff who participated were assured of this data confidentiality. Permission was sought when using any equipment such as recorders and they were all informed of their rights particularly that of confidentiality as outlined in the data protection act of 1998.

3.9.Outcome
a) The outcome of the data collection exercise and research enabled an understanding of the Tesco customer relationship management. 45

b) It also enabled the underlying reasons why Tesco has used it

overcome their competitors and how Tesco was able to make it competitive and successful.
c) It also provided an understanding of how customer relationship

management is used to support the driving the sales across the store.
d) Identifying the various ways of how CRM can improve the giant stores operational efficiencies in managing its relationships. e) Identify the criteria the supermarket uses to acquire valuable customers and the various f) types of CRM techniques available and the benefits that accrues to adopting CRM.

g) It also helped to identifying various methods that could be used to improve customer relationship management

4.Results: Analysis of Findings

4.1.Interview Questionnaire Development
This section summarises the results of the research into why the customer relationship at Tesco has been so successful and why there has been such customer loyalty and retention. In order to establish this, an interview questionnaire was developed to aid the collection of the data from participants. In order to save time, the researcher made on the spot interviews as and when opportunity was available to do so. The interviewer not only took time to record and transcribe exactly what was said and by whom, but also tried to give an indication of the tone in which it was said and the participants non-verbal communications. This was because the interviewer was not only interested on what participants said, but in the way they said it as well. 46

In the interview questionnaire development, the most relevant questions included the following: 1) What attracted you to shop with Tesco supermarket? 2) What facilities and add-ons services does Tesco offer to customers you to gain high market share? 3) What are the facilities that you enjoy/gain from Tesco supermarket? 4) In your opinion what do you think Tesco should do to continue to win more customers? 5) What criteria does Tesco use to acquire and support value customers in order to maintain their loyalty? 6) Why does Tesco always recommend high quality services to its customers? 7) What other customer services the market leader offer to customers? 8) Does Tesco respond to your needs as customers? If so, how quickly does it act on your queries? 9) What is the role of customer relationship management in the retention Tescos customers? 10)What method used to attract and maintain loyal customers and attract customers from competitions such as Marks and Spencers (M&S), Sainsburys and Waitrose? 11)What is the role of new media in the future growth of Tesco? 12)How are the online retailing arm Tesco.com and its new Argos-style catalogue service boosting Tesco Direct sales and market share for Tesco finest? 13)How does Tesco.com transform customers habits? 14)Would you recommend friends and family members to shop with 47

Tesco? Do you have comments if any that you would want to share with your interviewer? In order to heed to the word count limitation, the results of the analysis are divided into subsections according to the reasons given for the success of the
Tesco customer relationship management, with the summary of the findings depicted with an aid of a pictorial diagram and presented below.

4.2.Tesco.com and Tesco Direct

Tesco was one of the first retailers to go online with the launch of Tesco.com in 1995. The aim was initially as an edge against new eretailers. But Tesco.com is currently one of the largest online retailers in the UK, with sales of more than 2bn. Last year, one billion products were sold via Tesco.com. Instead of opting for huge warehouses for delivery processing, Tesco used in-store staff to pick items ordered over the internet off the shelves. According to John Browett (CEO Tesco.com) running home delivery service from the stores gave customers the best service and value and delivery times were kept below 30 minutes from store to house which enabled Tesco to keep down stores and also increased the shopping convenience of customers. In 2010 Tesco revamped its website as it moved onto a new platform that allowed international shipping which was a big improvement on the previous deadline that only allowed online shopping for customers in the UK, Ireland and South Korea. Tesco direct was founded in 2006, and retails a wide range of non-food products via the Internet and catalogues. In 2008, the organisation issued 11.5 million catalogues, attracted around 1.5 million visits to its website each week. This increased sales by more than 50% and with home shopping service selling more than 15,500 products which ranged from furniture, bicycles, and golf clubs to electrical products. It enabled customers to choose to have goods delivered to their home or allow them to pick them up at one of Tescos 261 in-store direct desks. The expansion of non-food sales is vital for Tescos future and it is predictable that Tesco will further enhance the capacity of its direct operation. In 2010, Tesco 48

direct sales grew by 28%. Based on the interview conducted, 60% of the participants said that they loyal because they can do business anytime they have opportunity. 30% said that it is the user-friendly of the service delivery that keep them with Tesco, while 10% said they have no tangible reasons.

4.3.Customer Relationship Management and Tesco Clubcard

Another area that enabled Tesco to be successful in their finest brand is in the customer relationship model and their club card royalty scheme. Customer Relationship Management is a comprehensive approach for creating, maintaining and expanding customer relationships (Anderson & Ker, 2002), and customer loyalty can be achieved through a number convenience of location, quality and price (Wright & Sparks, 1999). Relationship marketing shifts the focus of the marketing exchange from transactions to relationships (Stone & Young, 1992) and six market models such as internal, referral, supplier, alliance, recruitment, and influence identifies stakeholders. Successful relationship marketing and management can only be a success if the relationships are properly managed with all stakeholders with the ultimate aim being loyalty of all its customers. To further maintain loyalty, customers must be rewarded for their loyalty. Tesco club card is an effective way of recognising and rewarding customer loyalty. Tesco club card promotes incentive base loyalty by making the customer collect points rather than buying the product from someplace else at a slightly lower or equal price. Tesco Clubcard which was introduced in 1995 not only offer benefits to regular shoppers but it also enabled it to learn about their customers needs and shopping preference which further enabled them to cater for their customers shopping needs and requirements (Tesco, 2004, p. 3). Tesco is also very innovative with their loyalty scheme. For example, 49 during the Christmas period,

implements a double points campaign and mailed out vouchers. Additionally, it heavily discounted and extended its finest brand to prevent customers from going elsewhere. The former boosted loyalty during the important festive period whilst the latter helped persuade its customer base to shop thereby helping it to offset the competitive threats posed its main competitors who traditionally perform strongly over Christmas. In 2009 customers earned 550m in Clubcard vouchers (Tesco, 2010). Tesco CEO, Sir Terry Leahy admitted that "Tesco's strategy to earn loyalty through prices has kept shoppers at Tesco. We do well when people aren't feeling wealthy as we offer good value." Tesco Clubcards online presence (www.tesco.com/clubcard) offers an opportunity for interaction and flexibility between Tesco and Clubcard members. This is a rich environment for building customer and brand relationships, and for collecting customer data. Importantly, Clubcard operates seamlessly between online and in-store modes. From a relationship perspective this allows customers additional access to their statement, and information about the scheme in parallel with printed documentation, and access to clubs. From a branding perspective, the brand was replicated on the Internet and developed in the virtual world. From a customer data perspective, Tesco, and any partners with whom they share data, can build integrated profiles of online and offline shopping activity. This is very advantageous as it provided Tesco with customer profiles. According to Herstein and Gamliel (2006), private label brands can assist in developing loyalty to a retailer and in the creation of a distinct corporate identity for a company. The brand name Tesco Finest is in its own way promotes customer loyalty and profile. Empirical evidence supports the strong relationship between purchasing of high end store brands and store loyalty (Kumar, 2007) and the combination of Tesco finest brand and the loyalty scheme projects a favourable image (Steenkamp & Dekimpe, 1997) which further helped to build store loyalty and decreases store-switching behaviour. 50

Referring to the findings, 75% of the participants (management and customers) attributed Tescos success to the introduction of the clubcard, a way of appreciating customers loyalty through awarding points for every purchase. 18% said they are not and that they do not even have clubcards and other hand, 7% of the participants chose to remain neutral for reasons best known to them

4.4.Innovative and mobile marketing schemes

Advances in multimedia (data, voice and video), mobile and broadcast network technologies has created new business models and opportunities which Tesco has been adept at utilising to further its market share. One of the business models which Tesco has taken advantage of is mobile marketing which has gradually gained prevalence and importance over recent years. The increasing use of mobile networks and mobile devices for commercial activity (mobile commerce) has provided an opportunity to engage in targeted advertisement campaigns for new and existing products using consumers mobile devices. Mobile devices such as mobile phones are increasingly becoming intelligent and powerful communication devices. They are equipped with data, text and multimedia communication capabilities, and they are now routinely used for E-commerce, online banking, and to receive different types of information in a timely and personalised way. They have a high market acceptance and penetration and they have changed and impacted the way people access information and how they interact with business providers. Because they are very personal devices they are very attractive for use in targeted marketing campaigns and their sophistication makes them an advertisers dream as they are able to display different types of contextual information. Additionally the proliferation of mobile phones and devices such as Personal Data Assistants (PDA) has established them as a marketers dream and they have been heavily used by Tesco to contribute to the success of their brands. In fact, the importance of mobile marketing has led to Google buying AdMob in 2009 for US$ 750 million (Insight, 51

2009). Tesco has been able to control mobile marketing and have been able to allay customers fear of intrusion and privacy concerns which have been known to harm mobile marketing campaigns (Sipior et al., 2004). Tesco has used mobile marketing to target their customers with a personalised marketing approach thereby improving the Tesco brand. Outdoor advertisement revenues amounted to $34.4 billion in 2010 and a majority of this was from billboard advertisement (Charts, 2008). Although mobile billboard adverts mounted on vehicles gained popularity due to restrictions on stationary billboards, they have a number of disadvantages, such as the time needed to change the content, which reduces their cost effectiveness. The use of mobile phones and mobile devices for marketing purposes remove these disadvantages which makes them very popular. In fact, the mobile marketing industry is expected be worth $11.35 billion compared to $600 million in 2007 (Vatanparast & Asil, 2007) (Persson, 2010). Tesco used mobile technology as an opportunity to develop marketing campaigns that targeted customers by way of telephony, emails and SMS, and the Internet. SMS and MMS are the most popular mobile advertisement methods which enables mass and targeted marketing campaigns at lower costs (Samanta et al., 2009). Tesco, credit to them, understood the disadvantages of mobile marketing and avoided the pitfalls. There is a lot of advertisement and consumers often are exposed to advertisement on television, when they use Internet and from other ubiquitous sources such as billboards. Additional mobile advertisement in whatever form can annoy consumers who see such advertisements as spam, and therefore ignore them (Tawakol, 2002). Mobile terminal equipment such as mobile phones has small display and most do not have a full keyboard. This limits the amount of type information that can be used in mobile advertisements. Additionally, consumers are sometimes put off using interactive advertisements 52

because they reluctant to enter a lot of data on such limited interface. Mobile marketing raises many privacy concerns because mobile phones are very personal devices, and consumers are generally only willing to enter personal data if the privacy of their data is guaranteed. Privacy concerns are heightened especially in location based services in which user terminals are automatically located and targeted advertisements sent to consumers. Another impediment of using mobile marketing is the expensive usage of mobile data communications. This prevents consumers interacting with advertisements given that most consumers would not want to pay for the advertisements and expect the advertisers to pay. Tesco took and is still taking advantage of this new form of marketing platform to enhance brand awareness, optimise marketing campaigns and increase scale effectiveness. The potential impact of using mobile marketing is that it enabled Tesco to provide an intelligent, personalised and targeted marketing campaign at a lower cost, and it allowed Tesco to reach an increased number of customers and allowed brand and service advertisements to be sent to people who are interested them thereby enhancing brand awareness and increases sales. Although Tescos effective advertisement campaign was minor in the overall Tescos brand investment, it has largely been accredited to having played a crucial role in the remarkable transformation of Tescos fortunes, by enabling Tesco to attract new customers whilst retaining existing ones. Tescos advertisement campaign was instrumental in reshaping Tescos image which played a pivotal role attracting new customers and new potential employees. The potential threat from Tescos main competitors threatens the Tesco brand and profitability and Tesco needed to embark on expensive marketing campaigns for its new and increasing products. The advertisement campaign is needed to stave off stiff competition and change consumers perception of Tescos products as cheap. Tesco has used mobile marketing opportunity to use its share of the retail 53

market and used its advertising skills and the millions of Club card user database, which offered it the opportunity to have invaluable insight in consumer spending patterns, which it used to embark on a tailored and innovative marketing campaign. Tesco used it for an effective, personalised and cost effective marketing campaign. Tesco is expanding its business and range of products to the extent that some of its stores sell more of their latest products than the traditional foodstuffs. Tesco therefore use Location Based Services (LBS) to ensure that consenting consumers are sent targeted advertisements about Tesco services and products within their location, according to consumers needs. Another form of mobile advertisement that Tesco used is the insertion of advertisement messages into text messages, especially in mobile handsets purchased from Tesco. This was done in exchange rewards on the club car points or direct vouchers. Sourcing from the interview survey, 61% of the participants said it was the innovative and mobile marketing schemes that made them to start shopping with Tesco. 28% said they were introduce by either friends or family members, whilst 11% said they are not attracted by other means other than their desire to shop, they are not driven by the media related activities.

4.5.Embracing Technology
Another area that enabled Tesco to maintain and grow its market share was its use of advances in Information Technology (IT) which it successfully harnessed to improve performance, to reduce costs and to reduce the required workforce. IT which has witnessed tremendous developments over the years has been instrumental in optimising the performances of processes of financial services and it plays a vital role in the operation of financial services companies such as Tesco and it greatly influences how they do business. Services provided by Tesco are numerous and include banking, credit cards and consumer finance and they evolved, increased in reach, growth, and the amount of processing that they do is vast. Tesco has complex processes that are located in different locations which create 54

operational difficulties and the amount of information that it processes in real time is enormous, and most of that data is confidential and need to be protected. The risk of losing customer or that data might be stolen for fraudulent purposes are a taxing concern for Tesco and for financial services. Tesco therefore need to use back office IT systems that are bought and installed according to and as the needs of the company grows. These IT systems were installed over many years, and the systems are added as the company grew, depending on availability of new systems that offer improved performance. Tesco had to invest in new IT systems which were instrumental in optimising its operations. For example, their use of Enterprise Systems (ES) solved performance bottlenecks in by automating the diverse and complex processes carried out by Tesco. This helped change and enhance how some of Tescos services are created, how they are delivered and how they are used by customers. They have drastically changed the way that Tesco does business, and Tesco was innovative in using the IT systems to intelligently control processes that have become increasingly complex. This was necessary due to Tescos growth and in which office systems made up several systems that use tens or hundreds of databases and hundreds of software applications. Research has shown that IT structures in most companies are so dense that it is a surprise that they work at all. In fact they eventually become expensive to maintain and are excessively costly (Ross et al., 2006) and instead of the IT systems increasing efficiency they instead become a liability and expensive to maintain. Complex IT systems such as Enterprise Systems (ES) are used to reduce costs by automating the diverse and complex processes carried out by financial service companies and they have become big business with sales totalling US$ 19.9 billion as organisations continued to invest in them. Companies normally want changes to their automated systems and processes and therefore want changes and customisation of IT system to fit their needs. However, the complexity of IT systems such as ES increases tremendously, and a 25% increase in a companys complexity can result in a 100% increase in complexity. This is a major impediment because any increase in complexity can cause the IT system to become overly complex and expensive and the risks involved in change increases accordingly. Sometimes, large IT system such sometimes lack full integration which may negatively impact many organisations and many 55

companies see integration as an ongoing process (Koh, 2001). However, IT increases the flow and access to information including confidential and corporate information. The proliferation of Internet access enables customers to gain access to a companys IT infrastructure and distance and location does not become an issue. However, a lack of proper security can lead to the IT infrastructure being compromised, confidential data stolen and other security related problems which can have a huge negative impact on the company. This can however be mitigated by using security protocol to protect the data when being transported from one location to another, and to use operational defensive mechanisms such as firewalls and intrusion detection systems to protect the centralised information and data. The impact of IT on financial institutions is many and they depend on the type and size of the financial institution. Although IT systems are intensively used in financial services companies and it can theoretically improve performance and profitability, there has not been any clear and measurable proof of the amount of impact that IT systems have on financial institutions. This might be due to a lack of tangible measurable indicators or a lag in leaning the IT system for proper evaluation to be accurate. The exact impact of IT on Tesco such as quality optimisation has not yet been empirically proven and is subject to debate. However, Tesco has been innovative and judicious in the way it has used the new IT technologies to enhance its operations to further achieve performance enhancements. This has been very beneficial especially as Tesco has continued to grow in size and number of products, goods and services that it offers. Finally, majority of the participants (69%) said that technology is an aspect of Tescos recorded success over the years. 23% said the success was due to the fact that management as well as employees are using their technical-know how to gain a high market shares that in return has contributed to the success registered. 5% said that are not sure but believe it is mixture of various issues, while 3%said they actually dont know the story.

4.6.Conclusions of Findings
This section summarises the results of the research into why the customer 56

relationship at Tesco has been so successful and why there has been such customer loyalty and retention. In summary, over 120 Tesco management team, staff and customers interviewed during the research. In total, 30 management team and staff and 90 out of 100 customers took part in the research. 28% attributed the success due to their online presence and to the success of the Tesco direct portal. 20% thought that their customer relationship management service delivery and commitment. 23% said it was due to their customer loyalty scheme (clubcard) has been the anchor through which they were able to drive the success. Although important, only about 15% of Tesco management attributed the success to their embracing of advances in technology which enabled them to communicate effectively with their customers and which also enabled them to optimise operations and thereby provide customer services and needs at relatively cheaper prices. 10% said it was due to innovative and mobile marketing schemes, whilst 5% chose to be neutral. This reduction in operational costs enabled them to make to provide Tesco products and services at very competitive prices. The innovation in marketing especially the use of targeted marketing using latest technologies such as mobile marketing was attributed with the success by 65% of the management team respondents.

Figure 7: Customer

Perceptions on Tesco CRM Success

On customer services concepts and ranking for success (100 customers were approached but only 90 customer participants agreed to take part). Out of total ranking of 250, (i.e. 78+75+70+27), overall, customer 57

relationship management featured high on the reason for the success by 78% (i.e. 29 participants)of customers who feel that Tesco actually cared for them and really took their concerns into consideration. Nearly 75% (27 participants) of those that replied cited the Tesco clubcard scheme as evidence of Tesco caring and giving something back to their customers. This has also been cited as the key to loyalty. Over two thirds of the customers cited the Tesco direct and online business as a part of the overall shopping experience that Tesco offers them as the reason for loyalty and why they always go back to Tesco. Surprisingly though there is no mention of price as the reason for loyalty even though this has been a key feature of the Tesco advertisement campaign, and almost all of the customers 70% (25 participants) of customers perceive Tesco products and services in a good light and thought it as good value for money and 27% (9 participants) were neutral

Figure 7 Customer Services Ranking for CRM

5. Recommendations and Conclusions

5.1.Recommendations
The success of Tesco banding was based on a number of issues which can be used as a template of success. Tesco also operates tesco.com covers 96% of the UK. The Tesco.com is very successful with more than a million households having used it. This is another platform from which Tesco can derive huge revenues. Thus having a strong online presence is a prerequisite for building success which gives a competitive edge. There is however, an opportunity to increase its share of the retail market 58

which can be achieved by using market share and low cost brand and advertising skills to spur growth. There is also the opportunity for overseas growth to increase earnings. Tesco has millions of Clubcard users which offer it the opportunity to have invaluable insight in general and personal consumer spending patterns which can be used to tailor marketing campaigns with great effect. Reward schemes are very important and ensure that customers remain loyal and it is therefore a very key element for branding success. The market positioning of premium store brands provides consumers with a high value-added products with an innovative design and sometimes even higher quality than other brands. Therefore, and taking the position factor into consideration, premium store brands like Tesco Finest are often not priced lower than other brands. With widespread acceptance, particularly in the UK, these premium own-brands are designed to compete with leading brands while at the same time differentiating their brands from other brands. Another area that enabled Tesco to be successful in the customer relationship model and their club card royalty scheme. Customer Relationship Management is a comprehensive approach for creating, maintaining and expanding customer relationships. Relationship marketing shifts the focus of the marketing exchange from transactions to relationships and successful relationship marketing and management can only be a success if the relationships are properly managed with all stakeholders with the ultimate aim being loyalty of all its customers. Tesco used mobile technology as an opportunity to develop marketing campaigns that targeted customers by way of telephony, emails and SMS, and the Internet. SMS and MMS are the most popular mobile advertisement methods which enables mass and targeted marketing campaigns at lower costs. Tesco, credit to them, understood the disadvantages of mobile marketing and avoided the pitfalls. There is a lot of advertisement and consumers often are exposed to advertisement on television, when they use Internet and from other ubiquitous sources such 59

as billboards. Mobile terminal equipment such as mobile phones has small display and most do not have a full keyboard. This limits the amount of type information that can be used in mobile advertisements. Additionally, consumers are sometimes put off using interactive advertisements because they reluctant to enter a lot of data on such limited interface. Mobile marketing raises many privacy concerns because mobile phones are very personal devices, and consumers are generally only willing to enter personal data if the privacy of their data is guaranteed. Privacy concerns are heightened especially in location based services in which user terminals are automatically located and targeted advertisements sent to consumers. Another impediment of using mobile marketing is the expensive usage of mobile data communications. This prevents consumers interacting with advertisements given that most consumers would not want to pay for the advertisements and expect the advertisers to pay. The appropriate use of mobile and targeted advertisement is vital to successful branding as shown by Tesco. Another area that enabled Tesco to maintain and grow its market share was its use of advances in Information Technology (IT) which it successfully harnessed to improve performance, to reduce costs and to reduce the required workforce. IT which has witnessed tremendous developments over the years has been instrumental in optimising the performances of processes of financial services and it plays a vital role in the operation of financial services companies such as Tesco and it greatly influences how they do business. Tesco had to invest in new IT systems which were instrumental in optimising its operations. For example, their use of Enterprise Systems (ES) solved performance bottlenecks in by automating the diverse and complex processes carried out by Tesco. This helped change and enhance how some of Tescos services are created, how they are delivered and how they are used by customers. They have drastically changed the way that Tesco does business, and Tesco was innovative in using the IT systems to intelligently control processes that have become increasingly complex. This was necessary due to Tescos growth and in which office systems made up several systems that use tens or hundreds of databases and hundreds of software applications. The use of technology to drive new business ventures and optimise performance is vital for banding and success. 60

5.2.Conclusions
Private label brands were once considered at the bottom pile of the consumer products that were lower priced and lower value. Supermarkets saw them as tools of growth because of high returns in terms of margins and profitability on a relatively small investment. However, the times have now changed and private label brands have defied the conventional wisdom and can have a detrimental impact on a retailers long-term success. There has been a rapid shift in mindset about the role and requirements for todays private label brands and retailers are evolving to a new definition and greater focus for these proprietary offerings to elevate their stature and influence on the current and future business strategy. This dissertation presented the results of a study and investigation of how the perceptions of Tesco customer relationship management have been going from being perceived negatively to being widely accepted. Tesco continued increase market share through offering better value and providing more choice and convenience to customers was also investigated and the study enabled the identification of the potential growth areas of the Tesco brand, and to learn lessons from of how Tesco was able to make Tesco the biggest grocery brand in the UK. The study was not limited to the critical analysis and observations but an overall study of the Tesco customer relationship management perception, from conception to market domination. This study will enable the drawing up of recommendations of value to be made. The study established the current strength of the Tesco as a company and a market leader and to analyse the key factors behind its success. It also provided an in-depth knowledge of the workings of Tesco customer relationship management and investigated what the future of customer relationship management. The role of Tesco Direct (Tescos online arm) in future expansion will be discussed given that online sales should ultimately outstrip traditional store sales in future. The research formulated and found answers to the successes of Tesco as a brand and what inspired Tesco to launch that concept and how Tesco was 61

able to maintain its competitive edge. The study also found the key areas of growth for Tesco marketshare and what the envisaged growth areas in the service sector are. The study also investigated the role of customer relationship management in the retention Tescos customers and the method used to attract the loyal customers its. In summary, over 80% of interviewed Tesco management attributed the success to their online presence and to the success of the Tesco direct portal. The overwhelmingly majority (90%) thought that their customer relationship management, complemented with their customer loyalty scheme (clubcard) has been the anchor through which they were able to drive the success of the brand. Although important, only about 15% of Tesco management attributed the success to their embracing of advances in technology which enabled them to communicate effectively with their customers and which also enabled them to optimise operations and thereby provide customer services and needs at relatively cheaper prices. This reduction in operational costs enabled them to make to provide Tescos product and services at very competitive prices. The innovation in marketing especially the use of targeted marketing using latest technologies such as mobile marketing was attributed with the success by 65% of respondents. The result of this study can potentially ensure the use of a successful template in branding in the retail business, thereby increasing the components of customer relationship management. Additionally it provides answers of how IT systems can enhance performance levels and ensure that financial services companies remain competitive by using the appropriate IT systems that are customised for their needs. It will enable an understanding of the relationship between IT technology, it development and the impact it has financial services. It will also provide an insight into whether IT is developing too fast for financial services industry and whether the financial services industry should keep abreast with IT developments or use the technology that suits their needs.

62

Tesco products and services brands are quality driven assortments of many services and products which are targeted towards consumers. They are offered at reasonable and competitive prices in order to maintain their customer base through loyalty whilst at the same time competing for and capturing new customers in order to increase their market share whilst at the same time remaining competitive. The offering of high quality Tesco brands helps further build loyalty and the image of Tesco as an entity that offer high end own products. This has been successfully done and resulted in the moving Tesco away from the perception that it is a source of cheap products. Tesco has been able to achieve this double edged target of innovation through new high quality brands whilst remaining competitive through the creation of alternative brands and the creation of special segments and covering them with the quality brands, segments that would otherwise not have been provided. The success of the Tesco brands was so spectacular that by 2007, the Tesco brand label overtook Kellogg as UKs biggest grocery brand and as the economy starts to emerge from recession, customers are buying more from the products and services range compared to a like-for-like comparison with their competitors However, Tescos competitors have also been innovative and have begun to catch up on Tesco which has increased competition. Several factors are involved in these higher profit margins enjoyed by Tesco as a market leader and giant in the retail services and food industry. The reasons include cost saving in research and development budget, product launch and their advertising budget is comparatively very low. Despite the less cost, the private label brand can still command premium price. Constant and innovative promotions and targeted and mobile marketing sway consumers to become aware of price variation which results in deal seekers becoming regular purchasers of privately labelled brands over time. Consequently, and as a result of this pricing awareness of customers, many lines of Tesco brands get compared to regular, value Tesco brands, and sometimes even 63 compared to well-established

manufacturers brands. Although Tesco brands can command premium prices given that their notion of exclusiveness, they get stiff competition from their competitors and indeed from within the same store from the Tesco valued brands. Brand position of the Tesco is also another critical business pillar. Tesco direct was founded in 2006, and retails a wide range of non-food products via the Internet and catalogues. In 2008, the organisation issued 11.5 million catalogues, attracted around 1.5 million visits to its website each week. This increased sales by more than 50% and with home shopping service selling more than 15,500 products which ranged from furniture, bicycles, and golf clubs to electrical products. It enabled customers to choose to have goods delivered to their home or allow them to pick them up at one of Tescos 261 in-store direct desks. The expansion of non-food sales is vital for Tescos future and it is predictable that Tesco will further enhance the capacity of its direct operation. In 2010, Tesco direct sales grew by 28% and the following non-food Tesco products are available at Tesco direct. Tesco club card is an effective way of recognising and rewarding customer loyalty. Tesco club card promotes incentive base loyalty by making the customer collect points rather than buying the product from someplace else at a slightly lower or equal price. Tesco Clubcard which was introduced in 1995 not only offer benefits to regular shoppers but it also enabled it to learn about their customers needs and shopping preference which further enabled them to cater for their customers shopping needs and requirements. Tesco is also very innovative with their loyalty scheme. For example, during the Christmas period, implements a double points campaign and mailed out vouchers. Additionally, it heavily discounted and extended its finest brand to prevent customers from going elsewhere. The former boosted loyalty during the important festive period whilst the latter helped persuade its customer base to shop thereby helping it to offset the competitive threats posed its main competitors who traditionally perform strongly over Christmas. In 2009 customers earned 550m in Clubcard and 64

Tesco Clubcards online presence offers an opportunity for interaction and flexibility between Tesco and Clubcard members. This is a rich environment for building customer and brand relationships, and for collecting customer data. Importantly, Clubcard operates seamlessly between online and instore modes. From a relationship perspective this allows customers additional access to their statement, and information about the scheme in parallel with printed documentation, and access to clubs. From a branding perspective, the brand was replicated on the Internet and developed in the virtual world. From a customer data perspective, Tesco, and any partners with whom they share data, can build integrated profiles of online and offline shopping activity. This is very advantageous as it provided Tesco with customer profiles.

6.REFERENCES
aldi, 2010. aldi. [Online] Available at: http://www.aldi.co.uk/ [Accessed 30 August 2011].
Anderson, K. & Ker, C., (2002). Customer Relationship Management. New York: McGraw-Hill. Aspinall, E., Nancarrow, C. and Stone, M. (2001), The meaning and measurement of customer retention, Journal of Targeting, Measurement and Analysis for Marketing, Vol. 10 No. 1, pp. 79-87.

Berry, L.L. (1983), Relationship marketing. In: L.L. Berry, G.L. Shostack and G. Upah (Eds), Emerging Perspectives on Services, Chicago, American Marketing Association. Berry, L.L. (1995), Relationship marketing of services growing interest, emerging perspectives, Journal of Academy of Marketing Science, Vol. 23 No. 4, pp. 236 -45 Berry, L.L. (2002), Relationship marketing of services perspectives from 1983 and 2000, Journal of Relationship Marketing, Vol. 1 No. 1, pp. 59 77. Blattberg, R.C. and Deighton, J. (1991), Interactive marketing: exploring the age of addressability, Sloan Management Review, Vol. 33 No.1, pp. 514. 65

Broadbent, T (2000), How every little helps was a big help to Tesco, in Advertising Works 11, Chapter 1, World Advertising Research Centre, Henley-on- Thames Brown, S.A. (2000), Customer Relationship Management: A Strategic Imperative in the World of e-Business, PriceWaterHouseCoopers, Etobicoke, Ontario, John Wiley & Sons Canada Limited.
Burrows, D., 2010. Chosen by You revamp helps Asda sales growth. [Online] Available at: http://www.marketingweek.co.uk/sectors/retail/%E2%80%98chosenby-you%E2%80%99-revamp-helps-asda-sales-growth/3020586.article [Accessed 27 September 2011].

Buttle, F. (2004), Customer Relationship Management: Concepts and Tools, Elsevier, Oxford.
Charts, M.,(2008). Outdoor Advertising Market to Reach $30.4 Billion Worldwide. [Online] Available at: http://www.marketingcharts.com/outdoor/outdooradvertising-market-to-reach-304-billion-worldwide-1102/ [Accessed 2 September 2011].

Clough, P. & Nutbrown, C., 2007. A student's guide to methodology : Justifying enquiry. London: SAGE Publications. Collis, J. and Hussey, R. (2003), Business Research: A Practical Guide for undergraduate and Postgraduate Students, 2nd edition, Basingstoke, Palgrave, Macmillan.
Coviello, N.E., Brodie, R.J., Danaher, P.J. and Johnston, W.J. (2002), How firms relate to their

markets: an empirical examination of contemporary marketing practices, Journal of Marketing, Vol. 66 No. 3, pp. 33-46. CRM solutions for marketing and management to build profitable relationships with their most important clients (n.d), [online], Available from http://search.live.com/results.aspx?q=CRM+media&src=IE-SearchBox Accessed 9th September, 2011). Crosby, L.A., Evans, K.R. and Cowles, D. (1990), Relationship quality in services selling: an interpersonal influence perspective, Journal of marketing, Vol. 54, July, pp. 68 81.
Davies, G. & Brito, E., (2002). Price and quality competition between brands and own brands A value systems perspective. Eur. J. Market, 38(1), pp.30-55.

Dawkins, P.M. and Reichheld, F.F. (1990), Customer retention as a competitive weapon, Directors and Board, Vol. 14, Summer, pp. 42-7. Dereh, 2004. Competition Commission Report. [Online] Available at: http://www.competitioncommission.org.uk/inquiries/completed/2004/dragair/acceptance_of_under takings.pdf [Accessed 10 June 2011]. Dibb, S. and Meadows, M. (2001), The application of a relationship 66

marketing perspective in retail banking, The Service Industries Journal, Vol. 21 No.1, pp. 169 94. Dick, A.S. and Basu, K (1994), Customer Loyalty: toward an integrated conceptual framework, Journal of the Academy of Marketing Science, Vol. 22 No.2 pp99 -113 Dwyer, F.R., Schurr, P.H. and Oh, S. (1987), Developing buyer seller Relationship, Journal of Marketing, Vol. 51, April, pp. 11 27. Galbreath, J. and Rogers, T. (1999), Customer relationship leadership: a leadership and motivation model for the twenty-first century business, The TQM Magazine, Vol. 11 NO. 3, pp. 161 -171 Dynia, M.V. (2002), customer relationship management in the financial services world, LIMRAs MarketFacts Quarterly: Fall, April, p86; ABI/INFORM Global East, R. And Hogg, A. (1997), The anatomy of conquest: Tesco versus Sainsbury, Journal of Brand Management, Vol. 5 No.1, pp53-60 Ehrenberg, A.S.C, Barnard, N.R and Scriven, J.A (1998) Advertising is publicity Not persuasion, R&D I Research Report, South Bank University, London Easterby-Smith, M., Thorpe, R. and Lowe, Al (2002), Management Research. An Introduction (second Edition Ed.) London, Sage Publication. Fader, P.S. and Hardie, B (1996), Modelling consumer choice among SKUs, Journal of Marketing Research, Vol. 33, November, pp.442-52 Foss, B. and Stone, M. (2002), CRM in financial services: a practical guide to making customer relationship management work, London, Kogan Page Limited. Freeland, J. (2003), The new CRM imperative, The Ultimate CRM Handbook, New York, NY, McGraw-Hill. Grnroos, C. (1990), Relationship approach to marketing in service contexts: the marketing and organizational behavior interface, Journal of Business Research, Vol. 20, pp. 3-11. Gronroos, C. (1991), The marketing strategy continuum: toward a marketing concept for the 1990s, Management Decision, Vol. 29 No. 1, pp. 7-13. Grossnickle, J. & Raskin, O., 2001. Handbook of Online Marketing Research. New York: McGraw-Hill Professional. Gummerson, E. (1991), Qualitative Methods in Management Research, Sage Publication, Newbury Park, C.A. Gummesson, E. (2002a), Practical value of adequate marketing management theory, European Journal of Marketing, Vol. 36 No. 3, pp. 325-49. Gummesson, E. (2002b), Relationship marketing in the new economy, Journal of Relationship Marketing, Vol. 13 No. 1, pp. 37-57. Gupta, S., Lehmann, DR. and J.A. Stuart (2004), Valuing Customers, Journal of Marketing Research, Vol.41, February, pp. 7 - 18
Hall, J. & Wallop, H., 2010. The Telegraph. [Online] Sainsbury Available at:

67

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8016827/Sa insburys-relaunches-1bn-Taste-the-Difference-range.html [Accessed 1 September 2011].

Harker, M.J. (1999), Relationship marketing defined? An examination of current relationship marketing definitions, Marketing Intelligence & Planning, Vol. 17 No. 1, pp. 13-20 Hart, C.W. and Johnson, M.D. (1999), A framework for developing trust relationship, Marketing Management, Vol.8 No.1, pp. 20 -1.
Herstein, R. & Gamliel, E., (2006). The Role of Private Branding in improving service quality. Journal of Management Service Quality, 16(3), pp.306 -319. Insight, B., (2009). Mobile Advertising and Marketing - 3rd Edition. Berg Insight.

Jackson, B. (1985), Building customer relationships that last, Harvard Business Review, Vol. 63, pp. 120-8. Jackson, T.W. (2005), CRM: From art to science, Journal of Database Marketing & Customer Strategy Management; December, Vol. 13 No.1, p. 76 Jacoby, J. And Chesnutt, R (1978), Brand Loyalty Measurement and Management, John Wiley & Sons, New York, N.Y Jankowicz, A.D., 2000. Business Research Projects. 3rd ed. ITB.
Jin, B. & Sternquist, B.,( 2002). The influence of retail environment on price perceptions: An exploratory study of US and Korean students. International Market equity, J. Market., 57, pp.1-22.

Kahn, B.M; Kalwani, M.U and Morrison, D.G (1988) Niching versus changeof-pace brands: using purchase frequencies and penetration rates to infer brand positioning, Journal of Marketing Research, Vol. 25 No. 4 pp384-90 Kandampully, J. and Duddy, R. (1999), Relationship marketing: a concept beyond primary relationship, Marketing Intelligence and Planning, Vol. 17 No. 7. Koh, C (2001). Information Systems Research, Vol. 15, No. 4, December 2001, pp. 356373 Kotler, P. (1997), Marketing Management Analysis, Planning, Implementation and Control, 9th Edition, London, Prentice-Hall. Kotler, P. and Armstrong, G. (2004), Principles of Marketing, 10th edition, Englewood, Cliffs, NJ, Prentice-Hall
Kumar, N., (2007). Private Label Strategy: How to meet the store brand challenge. Harvard Business School Press.

Lindsay, J.M. (1997), Techniques in Human Geography, London, Routledge. Luck, D. and Lancaster, G. (2003), E-CRM: customer relationship marketing in the hotel industry, Managerial Auditing Journal, Vol.18 No. 3, pp. 213 -31. McDonald, M. (2007), Marketing Plans: How to prepare them, How to use them (6th ed.) Oxford, Butterworth- Heinemann, Elsevier McGivern, Y., 2003. The Practice of Market and Social Research: An introduction. Harlow: FT Prentice Hall. Morgan, R.M. and Hunt, S.D. (1994), The commitment-trust theory of 68

relationship marketing, Journal of Marketing, Vol. 58, pp. 20-38.

Laaksonen, H. & Reynolds, J., (1994). Own brands in food retailing across Europe. Journal of Brand Management, 2(1), pp.37-46.

Lewis, B. and G. Bingham, (1991), The youth market for financial services, International Journal of bank Marketing, Vol. 9 No. 2, pp. 3 -11. Lindgreen, A., Davis, R., Brodie, R.J. and Buchanan-Oliver, M. (2000), Pluralism in contemporary marketing practices, International Journal of Bank Marketing, Vol. 18 No. 6, pp. 294-308 Luck, D. and Lancaster, G. (2003), E-CRM: customer relationship marketing in the hotel industry, Managerial Auditing Journal, Vol.18 No. 3, pp. 213 -31. Malhotra, N. & Birks, D., 2006. Marketing Research: an applied approach. London: Prentice Hall Financial Times. McDonald, M. (2007), Marketing Plans: How To Prepare Them, How To Use Them, 6th edition, Oxford, Elsevier Butterworth Heinemann. McLeod, R. and Schell, G.P. (2004), Management Information Systems, Harlow, Essex, Pearson Education Limited. Morrisons, (2010). morrisons. [Online] Available at: http://www.morrisons.co.uk/ [Accessed 10 September 2011]. Nevin, J.R. (1995), Relationship Marketing and distributing channels: exploring fundamental issues, Journal of the Academy of Marketing Science, Fall, pp.327 34. Normann, R., 1970, A Personal Quest for Methodology, Stockholm: Social and Marketing Research Center (SIAR) Vol.19. Oliver, R.L (1999) whence customer loyalty, Journal of Marketing, Vol.63, pp33-44 Osborne, C. (2002), Strategy: Managing Customer Relationships, The Society of Marketing Professional Services (SMPS), Marketer, Vol.21, October, No. 5, pp. 1-24. Palmer, A. (2000), Co-operation and competition: a Darwinian synthesis of relationship marketing, European Journal of Marketing, Vol. 34 Nos 5/6, pp. 687-704. Parvatiyar, A. and Sheth, J.N. (2000), The domain and conceptual foundations of relationship marketing, in Sheth, J.N. and Parvatiyar, A. (Eds), Handbook of Relationship Marketing, Sage Publications, Thousand Oaks, CA, pp. 3-38. Parvatiyar, A. and Sheth, J.N. (2001), Conceptual framework of customer relationship management, in Sheth, J.N., Parvatiyar, A. and Shainesh, G. (Eds), Customer Relationship Management: Emerging Concepts, Tools and Applications, New Delhi, Tata McGraw-Hill, pp. 3-25. Payne, A. (2000), Customer relationship management, The CRM-Forum, available at: www.crm-forum.com Peppers, D. and Rogers, M. (1993), The one to one Future: Building 69

Relationships One Customer at a Time, New York, N.Y, Doubleday. Peleen, E. (2005), Customer Relationship Management, Harlow, Essex, FT, Financial Times, Prentice- Hall. Peppers, D. and Rogers, M. (1995), A new marketing paradigm: share of customer, not market share, Planning Review, Vol. 23 No. 2, pp. 14-18. Peppers, D. and Rogers, M. (2004), Managing Customer Relationships: A strategic Framework, Hoboken, New Jersey, John Wiley & Sons, Inc.
Persson, M., (2010). Mobile Advertising and Marketing. [Online] Available at: http://www.berginsight.com/ReportPDF/ProductSheet/BI-MAM-PS.pdf [Accessed 6 September 2011].

Perrien, J. and Richard, L. (1995), The meaning of a marketing relationship: a pilot study. Industrial Marketing Management, Vol. 24, pp. 37- 43. Rigby & Ledingham (2004). CRM Done Right, Harvard Business Review Onpoint, Product 8355 Robson, C., 2002. Real World Research: A Resource for Social Scientists and Practitioner-researchers. New York: John Wiley & Sons.
sainsbury, 2000. Sainsbury. [Online] Available at: http://www2.sainsburys.co.uk/food/mealideas/taste-the-difference/taste-thedifference.htm [A ccessed 7 September 2011]. Ross, S.W., and M.S. Nizinski. (2006)State of deep coral ecosystems in the U.S. southeast region: Cape Hatteras to southeastern Florida. Pp. 233-270 in Lumsden, S.E., T.F. Hourigan, T.F. Bruckner, and G. Dorr (eds.). The State of Deep Coral Ecosystems of the United States. NOAA Technical Memorandum CRCP-3. Silver Spring, MD.

Rowley, J. (2004), partnering paradigms? Knowledge management and relationship marketing, Industrial Management & Data Systems, Vol.104 No. 2, pp. 149 57. Russell-Jones, N. (2002), Customer Relationship Management, Canterbury, Financial World Publishing. Rust, R.T. and Zahorik, A.J. (1993), Customer satisfaction, customer retention, and market share, Journal of Retailing, Vol. 69 No. 3, pp. 193215 Ryals, L. and Payne, A. (2001), Customer relationship management in financial services: towards information-enabled relationship marketing, Journal of Strategic Marketing, Vol. 9 No. 1, pp. 3-27.

Samanta, S.K., Woods, J. & Ghanbari, M.,(2009). Future Mobile Billboard. In IEEE Sarnoff Symposium. Princeton, New Jersey, USA, 2009. IEEE.

Saunders, M., Lewis, P. and Thornhill, A. (2003) 'Research Methods for Business students, 3rd edition, Hallow, Essex, FT Prentice - Hall Sin, L.Y.M., Tse, A.C.B. and Yim, F.H.K. (2004), Customer Relationship Management: conceptualization and scale development, European Journal of Marketing, Vol. 39 No. 11/12, pp. 1264 1290.
Sipior, J.C., Ward, B.T. & Bonner, P.G., (2004). Should Spam be on the menu? Communications of the ACM, 47(6), pp.59-63.

Steenkamp, J. & Dekimpe, M., (1997). The increasing power of private labels:

70

building loyalty and market share. Long Range Planning, 30(6), pp.917-30. Stone, M. & Young, L.D., (1992). Competitive Customer Care: A guide to keeping customers. London: Croner. Tawakol, O., (2002). Lions and Antelopes in the Advertising Ecosystem. [Online] Available at: http://publications.mediapost.com/index.cfm? fuseaction=Articles.showArticle&art_aid=1392 [Accessed 21 July 2010]. Tesco.com, (2004). tesco.com. [Online] Available at: www.tesco.com [Accessed 5 September 2011].

Tesco overview and company background and profile, (n.d), [online], Available from: (http://web.ebscohost.com/ehost/detail? vid=5&hid=112&sid=04bfca26-32d1-4eb2-b343- c1fe7c1f3b6e %40sessionmgr103&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d %3d#db=bth&AN=36585680 [Accessed 10 September 2011] Tesco, 2010. Tesco PLC Annual Report and Financial Statements. [Online] Available at: www.tesco.com/annualreport2010 [Accessed 10 September 2011].
Tesco.com, 2010. tesco.com. [Online] Available at: www.tesco.com [Accessed 5 September 2011].

Tesco.com, 2011. tesco.com. [Online] Available at: www.tesco.com [Accessed 5 September 2011]. Tesco Clubcard rewards and offers. [Online] Available at: www.tesco.com/clubcard/clubcard/ [Accessed 29 September 2011] The ABCs of CRM (2005), The ABCs of CRM, CIO Magazine, available at: www.cio.com Thompson, J., 2008. Recession slows the Tesco juggernaut. London: Independent Newspaper The Independent. Thwaites, D. and L. Vere (1995),Bank selection criteria a student perspective, Journal of Marketing management, Vol.11, pp. 133- 49. Turban, E., McLean, E. and Wetherbe, J. (2004), Information Technology for Management, New York, NY, Wiley, UK, C.W., 2004. TESCO: A Corporate Profile. [Online] [Accessed 10 September 2011].
Vatanparast, R. & Asil, M., (2007). Factors Affecting the Use of Mobile Advertising. International Journal of Mobile Marketing, 2(2), pp.21-34.

Vavra, T. G. (1992), Aftermarketing: How to Keep Customers for Life through Relationship Marketing, Homewood, IL, Business One- Irwin. Wilson, A., 2006. Marketing Research: An Integrated approach. 2nd ed. Harlow: FT Prentice Hall.
Wright, C. & Sparks, L., (1999). Loyalty saturation in retailing: exploring the end of retail loyalty cards? International Journal of Retail & Distribution Management, 27(10), pp.429-39.

71

Yau, O., Lee, J., Chow, R., Sin, L. and Tse, A. (2000), Relationship marketing: the Chinese way, Business Horizon, Vol. 43 No. 1, pp. 16-24. Yin, R.K. (1994), Case study research. Design and methods, 2nd edition, applied social research method series, Vol.5, Sage Publications Zablah, A.R., Bellenger, D.N. and Johnston, W.J. (2004), An evaluation of divergent perspectives on customer relationship management: towards a common understanding of an emerging phenomenon, Industrial Marketing Management, Vol. 33 No. 6, pp. 475-89. Zikmund, W.G. (2003), Business research methods, 7th edition, Cincinnati, OH, Thomson South Western

Appendix A: Letter of Introduction

Dear Sir/Madam, My name is xxx and I am currently studying for an MBA at [xxxx]. I am conducting a research on Tesco customer relationship management. I will be grateful if you can fill the following questionnaire and hand it to the researcher or send it using the self addressed envelope provided. 72

This is a vital part of my studies which is intended to give me a practical understanding of real customer relationship management in businesses such as Tesco. The key aims of this study are the establishment of the current strength of the customer loyalty and retention and to analyse the key factors behind its success. Another objective of this research is to gain and in-depth knowledge of the workings of Tesco customer relationship management. Achieving these aims will help me to answer the some vital research questions and reach a conclusion. Specifically, your help is needed in participating and to help me to answer the following research questions.
1) Why customers continue to be loyal to Tesco and not changing to their competitor? 2) What is it that Tesco does to keep and retain customers and what add-ons services do the market leader offer to earn their customer loyalty? 3) What are customers attitudes towards the supermarket and how does the market leader relates and manages such attitudinal behaviours?

4) What is the role of customer relationship management in the retention Tescos customers and the method used to attract the loyal customers its competitors such as Marks and Spencers ( M&S), Sainsburys and Waitrose? 5) How are the online retailing arm Tesco.com and its new Argos-style catalogue service boosting Tesco Direct sales and market share for Tesco CRM and how they transform customers habits? Thank you for your time and support. [xxxxx]

Appendix B: Interview Questions

Date: 1) Greetings and thank you for taking part. 2) What attracted you to shop with Tesco supermarket? 3) What facilities and add-ons services does Tesco offer to 73

customers you to gain high market share? 4) What are the facilities that you enjoy/gain from Tesco supermarket? 5) In your opinion what do you think Tesco should do to continue to win more customers? 6) What criteria does Tesco use to acquire and support value customers in order to maintain their loyalty? 7) Why does Tesco always recommend high quality services to its customers? 8) What other customer services the market leader offer to customers? 9) Does Tesco respond to your needs as customers? If so, how quickly does it act on your queries? 10)What is the role of customer relationship management in the retention Tescos customers? 11)What method used to attract and maintain loyal customers and attract customers from competitions such as Marks and Spencers (M&S), Sainsburys and Waitrose? 12)What is the role of new media in the future growth of Tesco? 13)How are the online retailing arm Tesco.com and its new Argos-style catalogue service boosting Tesco Direct sales and market share for Tesco finest? 14)How does Tesco.com transform customers habits? 15)Would you recommend friends and family members to shop with Tesco? Do you have comments if any that you would want to share with your interviewer? 74

Appendix C: Questionnaire
Date: 1) Which Tesco Store do you do your shopping? 2) How long have you been a Tesco customer? 3) Do you consider yourself a loyal Tesco customer?
4) Are you aware of Tescos position in the market and do you

why they are successful today? 5) What is your perception of Tescos successes and if so, why? 6) Do you shop at other Morrisons/Asda/Aldi/Sainsburys Supermarkets e.g.

7) Are you aware of other quality services and products offered by Morisons/Asda/Aldi/Sainsburys? 8) How do these compare to Tescos? 9) What is its downside? 10)What is the role of customer relationship management in the retention Tescos customers? 11)How does Tesco.com transform customers habits? 12)Would you recommend friends and family members to shop with Tesco? 13)Does Tesco respond to your needs as customers? If so, how 75

quickly does it act on your queries? 14)Please comment on areas that you think might improve Tesco and its related services and products?

76